THE China Merchants investment fund specialising in mainland projects will cash in on the rising yuan, according to fund chairman Jiang Bo. He said a stronger yuan was good for business, although it increased costs initially. China Merchants China Direct Investments, with an asset value of US$100 million, is a closed-ended fund incorporated in Hong Kong and floated in 1993. About 57 per cent of the fund was invested in mainly long-term investments almost two years after the flotation in a process which Mr Jiang admitted was slow. 'But we have to be very careful about what to invest, and so far we're happy with all our 10 projects, unlisted companies, which are going smoothly,' Mr Jiang said. Five of the projects, ranging from banking, transportation and electronics to real estate, had brought in revenue for 1994. 'The five other projects are going to be profitable too,' Mr Jiang said. The fund's investment of about $2.5 million in H and B shares in China hit some snags. It registered a loss of $450,000 from securities investment as an exceptional item for the financial year to December 31. 'Investment in securities came to about 2.5 per cent of our fund, and we're not unaware of the risk involved,' he said. 'So we've capped this kind of investment to under four per cent from the outset.' Proposals under negotiation included a spandex cloth plant in Jiangsu, a 40-kilometre highway linking Zhangzhou, Fujian and Xiamen, a power plant in Qingdao, and a steel tube plant in Hebei. They involved investment of about $10 million each, and could use the remainer of the fund if they proceeded. Mr Jiang told yesterday's meeting the fund's projects were not subject to restrictions by state macroeconomic control measures. Profit after taxation for the year was $3.5 million, a 146 per cent rise on 1993. HSBC (Nominees) has a 30.5 per cent interest in the fund, and China Merchants Holdings 10.5 per cent.