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China’s fund markets are seen to grow

DEVELOPMENT of hedge funds and private equities markets will accelerate in China on easier regulation and market innovations, an expert from the Chartered Alternative Investment Analyst Association said.

China Financial Futures Exchange last week relaxed trading of stock index futures, marking a return of regulatory support on short trading, said Nelson Lacey, director of exams at the CAIA.

In a move to “facilitate market functions,” the Shanghai-based exchange doubled the maximum limit on daily non-hedging stock index future trading, reduced margin requirements for non-hedging transactions, and lowered commission on position-closing.

The stock index futures was criticized to have exacerbated China's stock market tumbles in 2015 and the trading was restricted as part of measures to stabilize the market.

“That allows some room in the market for short positions in the market, though it doesn't provide the protection that a lot of investors need,” Lacey said. “As regulations eased, more and more strategies will become viable.

Within the alternative investment field, private equity will continue to be another big story because of the emergence of new ideas and new companies, Lacey said.

He said China's development of payment systems have progressed far ahead of the US, reflecting the country's technological innovation capabilities.

Set up in 2002 in the US, CAIA aims to educate young professionals working in the alternative investment market mainly covering five fields including the real properties, private equity, managed futures, hedge funds and structured products.

CAIA now has around 100 members in China.


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