Regulator urges funds to raise game

Investors check stock prices at a securities brokerage in Fuyang, Anhui province. [Photo by Lu Qijan/For China Daily]

China's fund industry, which comprises sectors like mutual funds, private equity and venture capital firms, should continue to pursue high-quality development as it has a key role in the country's real economy and helps manage household wealth, said a top official on Monday.

The quality of investment management and services should be further improved in the fund industry by optimizing investment consulting, sales, trust, valuation, and assessment mechanisms, said Yi Huiman, chairman of the China Securities Regulatory Commission, at a conference organized by the Asset Management Association of China on Monday.

To ensure stable development, mutual fund companies should further enhance their compliance awareness while private equity firms should master the entire process from seeking financing and investment to exit, said Yi.

The Chinese mutual fund industry has leapfrogged over the past few years in terms of scale and total amount. By the end of July, the total assets under management or AUM of mutual funds in China reached 23.5 trillion yuan ($3.6 trillion), 1.6 times the corresponding figure at the end of 2016.

China has become the world's fourth-largest mutual fund market, up five places from its position five years ago.

Up to 5,140 equity fund products have been issued by the end of July, with their total value reaching a record high 7.7 trillion yuan. The scale of private equity and venture capital in China came in at 12.6 trillion yuan, the second-largest worldwide.

By the end of June, the various fund products have invested up to 10.8 trillion yuan in A-share stocks, accounting for 12.5 percent of the total value of the A-share market.

The fund industry has thus become an important stabilizer of the capital market. Both mutual funds and private equity firms have participated in corporate governance in various ways, which also facilitates the regulated operation of public companies, said Yi.

As Yi further explained, fund companies have enriched their product portfolio while the entry mechanism in the mutual fund industry has been simplified over time. There are now more than 1.19 billion effective accounts eligible for investing in mutual fund products.

By the end of June, up to 3.6 trillion yuan of pension funds have been invested in the fund industry, which is more than half of the total value of entrusted pension fund.

As investors see their various wealth management needs met, they put more trust in the fund industry. The mutual fund sector has also helped with the sustained development of China's pension fund management as well as the optimization of the capital market, said Yi.

Meanwhile, the overall fund industry has played a bigger role in supporting innovation, entrepreneurship and industrial upgrading, he said.

Of the 7.6 trillion yuan worth of private equity funds devoted to various projects, 28 percent of them have been directed to small and medium-sized enterprises, 26 percent to high-tech companies and 33 percent to startups.

Ever since the registration-based IPO mechanism was adopted in June 2019, more than 80 percent of the companies at the STAR Market in Shanghai and 60 percent of those listed on the ChiNext in Shenzhen have all been financially supported by private equity and venture capital firms.

Attempts have also been made in helping to achieve the country's 2060 carbon neutrality goal by releasing 480 billion yuan of green-themed fund products, according to public data.