China Asset Management raises 10b yuan in one day

PUBLISHED : Friday, 11 December, 2009, 12:00am
UPDATED : Friday, 11 December, 2009, 12:00am

China Asset Management, the mainland's largest mutual fund manager, yesterday said it had raised its targeted 10 billion yuan (HK$11.35 billion) for a new stock-focused fund in one day, a sign that a fresh capital influx may continue to boost the bullish A-share market.

The Beijing-based firm said in a statement that it closed fund-raising 20 days ahead of schedule after a subscription spree on Wednesday.

The fund, which plans to invest up to 90 per cent of its assets in stocks, is managed by Liu Wendong, who has 12 years of investment experience.

The fund received subscriptions worth up to 20 billion yuan on the first day of the sale, the Shanghai Morning Post reported yesterday.

'The buying euphoria has not been seen for two years, and it reminded investors of the good days in 2007 when bullish sentiment dominated the market,' said China Jianyin Investment Securities analyst Yang Zongyao. 'The easy sale of the fund also proved strong liquidity on the A-share market.'

The Shanghai Composite Index has advanced 78.7 per cent this year, closing at 3,254.26 points yesterday. The benchmark gauge tumbled 65.4 per cent in 2008, the biggest annual drop in its history.

China's asset management firms raised a combined 343.7 billion yuan by offering 107 funds so far this year, according to Shanghai-based financial data provider Wind Information.

More than 10 funds are still open for subscription and total mutual fund sales this year are likely to exceed 400 billion yuan.

Analysts said more mainland residents withdrew money this year from bank accounts than last year to bet on a further surge in stocks.

Beijing is set to tweak its loose monetary policy next year amid worries about asset bubbles after banks granted 8.92 trillion yuan in loans in the first 10 months of this year, up 143.7 per cent from last year.

However, analysts forecast that liquidity in the A-share market would remain strong as more individual investors bet their savings on stocks.

Bullish analysts predicted the Shanghai indicator could hit 4,000 points in the first quarter of next year as listed firms report earnings growth for this year having benefited from China's economic recovery.

The launch of new funds has given A shares a shot in the arm, offsetting sell-off pressure in the market from some investors who cashed out to lock in handsome gains.

Nearly 30 funds launched since September are now building their portfolios, injecting fresh capital of 100 billion yuan.