A fund company controlled by Shenzhen municipal government-backed Guoxin Securities is expected to launch a state-approved mutual fund as early as next month, paving the way for the second round of launches of mutual funds. Industry sources said Shenzhen-based Guoxin would take a 50 per cent stake in the soon-to-be-formed fund company, although the China Securities Regulatory Commission tends to favour fund companies that are equally held among shareholders. The remaining stake in the fund company would be shared equally among Beijing International Trust and Investment Corp (ITIC), Zhejiang Securities, Liaoning-based Anshan Trust and Investment (T&I) Corp and Shenzhen-based United Securities. It is understood United Securities has not decided whether it will join the fund company in view of Guoxin's majority stake. Industry sources said the fund company, carrying a registered share capital of 80 million yuan (about HK$74.4 million) would, like the first five funds, launch a close-ended fund of two billion yuan each for investment in listed stocks and treasury bonds as early as October. The fund would be listed in Shenzhen. Beijing said in July it would double the number of mutual funds to 10 by the end of this year, to speed up growth of an institutional-investor base in stock markets. As the initial excessive premium of closed-end funds had shrunk sharply as the number of funds rose and markets fell, fund-management hopefuls believe professional fund management would be in great demand. Other candidates to join the Guoxin-led group are run by fund companies separately controlled by Citic Securities, Shanghai-based Shenyin & Wanguo Securities, China Everbright Securities and Guangdong-based GF Securities. Shenyin and China Everbright have separately held stakes in the first fund companies licensed to launch funds. Industry sources said the second five fund companies would have six founding shareholders each, except for Guoxin, which would have five. Each of them would launch mutual funds of two billion yuan but their registered share capital may vary. Citic Securities would be joined by Dongfang T&I Corp, Jilin ITIC, Anhui ITIC, Tianjin Beifang ITIC and Tianjin T&I Corp. Shenyin would team with Shanghai-based Haitong Securities, Shandong ITIC, People's Insurance Co of China's T&I Corp, Fujian ITIC and Sichuan ITIC. The fourth group will include China Everbright, Shenzhen-based China Great Eagle Securities, China Economy Development's T&I Corp (controlled by the Ministry of Finance), China Huarong T&I Corp, which spun off from the Industrial and Commercial Bank of China, Guangdong Overseas Chinese T&I Corp, Hunan ITIC. Finally, GF Securities will join with Beijing Securities, China Coal T&I Corp, China Economic and Trade's T&I Corp, Jilin T&I Corp and Hunan T&I Corp.
