Chinesepod - China?fund raises 50b yuan?in one day

?  ?

BIZCHINA / Top Biz News

China?fund raises 50b yuan?in one day

(Agencies)
Updated: 2007-09-13 15:40

The long-awaited surge of retail money from China into international
financial markets started to become a reality on Wednesday when a Chinese
investment management company raised at least 50 billion yuan (US$6.6
billion) for an overseas equity fund in a single day.

China Southern Fund Management opened subscriptions on Wednesday morning.
Counting was continuing last night and one industry executive said the
total would reach 60 billion yuan.

Related readings:

?China mulls lowering threshold for QDII investment
?CICC becomes 1st securities QDII
?JP Morgan: QDII to reach US$90b next year
?China AMC plans $1.3b QDII fund in Sept

Special Coverage:
Markets Watch??

T he fund is the first in China to invest only in overseas equities and
is part of a government scheme gradually to allow Chinese investors to
put money into international markets.

Peter Alexander at Z-Ben Advisors, a fund management consultancy in
Shanghai, said: "This is the first real sign of Chinese retail demand for
foreign assets. But there will be much, much more to come."

Some analysts have predicted that Chinese individuals, who have about
US$2 trillion bank deposits, could invest hundreds of billions of dollars
overseas over the next decade and the prospect of such inflows has
boosted Hong Kong share prices.

But until now there had been few signs of genuine demand from Chinese
savers for overseas investment products, in part because the renminbi is
expected to continue appreciating, which would reduce the returns.

The China Southern fund will invest in shares in 10 different markets,
with Hong Kong and the US as the first targets.

In a reflection of how much demand the company had expected, China
Southern originally applied for a foreign exchange quota of 15 billion
yuan. "It exceeded our wildest expectations," a senior fund official said
of the subscriptions.

A large outflow of investment funds could endanger the remarkable rally
in the mainland stock markets, which have seen share prices rise fivefold
in two years and left many analysts warning of a bubble.

However, in a sign of continuing strong demand for Chinese stocks, Bank
of Beijing said last night its initial public offering had attracted
subscriptions of 1.9 trillion yuan, a record for a Chinese flotation. The
offering was subscribed by 126 times.

(For more biz stories, please visit Industry Updates)

Learn Chinese, Chinesepod