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September 16, 2009

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Home » Business » Finance

Managed funds take hit in slump

THE average return of funds managed by overseas institutions to trade in yuan shares declined 20.5 percent last month after the country's stock market slumped amid concern about tightened monetary policies, an industry report said yesterday.

The performance was worse than that of equity funds, which reported a 19.33 percent decline in average returns, according to fund research firm Lipper & Co.

In the first eight months, the average return of funds operating under the Qualified Foreign Institutional Investor program rose 46.02 percent from a year earlier, compared with a 72.42 percent growth in the first seven months.

"The Shanghai Composite Index plunged 21.81 percent last month, but economic figures, including investment and retail sales, indicated that China's economy is on the track of recovery and the index will head upward," said Xav Feng, research head of Lipper China.

China plans to raise the limit that individual foreign institutions can invest in the mainland's stock markets, the State Administration of Foreign Exchange said in draft rules issued on September 4. QFII investors will be allowed to each invest as much as US$1 billion, up from the existing US$800 million. The country has approved 87 QFII funds.

"The move is aimed at encouraging investor confidence as well as stabilizing the market," said Feng.

The return of funds operating under the Qualified Domestic Institutional Investor program, which allows Chinese institutions to invest in foreign shares, lost 4.91 percent last month. The funds returned 37.08 percent on average in the first eight months.


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