New mutual funds on ice to cool market
11 January 2007
China's securities regulator has suspended the launch of new mutual funds "for a few months" in a bid to cool the red-hot stock market, sources told the South China Morning Post. The doubling of assets under management at mainland mutual funds to more than US$110 billion in the past six months has been one of the key drivers of the huge jump in the mainland stock market. The Shanghai Composite Index closed Wednesday at another record high of 2,825.58 points, up 0.63% from Tuesday, after rising 130% last year. "This market is so crazy now and mutual funds are required to start buying shares within 10 days of launching, which obviously pushes up stock prices," one source said. "So the China Securities Regulatory Commission has stopped approving new funds for now." There are more than 10 funds awaiting CSRC approval.