China funds lost $741 mln on weak market in H1
Mon Aug 29, 2005
SHANGHAI, Aug 29 (Reuters) - China's mutual fund industry made a loss of over $741 million in the first half due to the poor performance of the market, according to figures carried in an official securities newspaper on Monday.
China's 181 mutual funds managed by 42 fund firms lost a total of 6 billion yuan ($741.1 million) in the first six months of 2005, the China Securities Journal said.
The newspaper did not explain the loss in detail, but generally attributed it to weak market conditions.
Beijing's unpopular programme kicked off in April to offload over $200 billion of government holdings in listed firms has pushed the market to eight-year lows as investors feared the flood of state shares would dilute the value of their holdings.
The major stock index, though lifted slightly by Beijing's currency revaluation in July, is still down 7.5 percent so far this year, after falling 15 percent in 2004.
According to the newspaper, the top 10 fund firms had 64 percent of the mutual fund market, up from 55.4 percent in the year-ago period.
"Large fund firms mainly built strong positions in blue chip stocks in the first half but were also active in selling these same large-capitalised stocks for short-term investment gains," the paper added.
Top Chinese steel make Baoshan Iron and Steel Co. Ltd. (600019.SS: Quote, Profile, Research) was the top stock fund managers bought into, followed by China Unicom (600050.SS: Quote, Profile, Research), the smaller of the two cellphone operators in China, and top listed lender Merchants Bank (600036.SS: Quote, Profile, Research), the report said.
Foreign investors in China's primary stock and debt markets under the Qualified Foreign Institutional Investor programme as well as National Social Security Fund increased their investments in close-end funds fast in the first half, the report said.
QFIIs including Goldman Sachs (GS.N: Quote, Profile, Research) and Morgan Stanely (MWD.N: Quote, Profile, Research) held 2.09 percent of the closed funds on the market by the end of first half, compared with just 0.65 percent by the end of last year, the report said.
According to U.S. pension fund manager Principal Financial Group Inc. (PFG.N: Quote, Profile, Research), China's nascent mutual fund industry -- populated with more than 40 firms but only about a dozen Sino-foreign ventures -- doubled in size to almost $40 billion of funds under management in 2004.
That is expected to hit $60 billion by 2008, the U.S. firm has said. ($1=8.096 Yuan)
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