MOST American funds are unlikely to invest in China's B shares when they are allowed to do so, says US-based Dean Witter Reynolds Inc, which manages US$60 billion in mutual funds. Mr Paul Loo, senior vice-president for the Pacific region of Dean Witter, which claims to be the fifth biggest mutual fund manager in the US, yesterday said most US funds were conservative. The US Securities and Exchange Commission has given the go-ahead to US investors to directly buy B shares. But Mr Loo said Dean Witter was not prepared to be in the B-share market yet. He hinted that the mainland's exchanges of Shanghai and Shenzhen were not attractive because of their low liquidity. Unacceptable accounting procedures by mainland companies also were deterring US investors. ''These are things that have to be got used to by US funds over a period of time if they are to invest in China,'' Mr Loo said during a visit to Hongkong. ''China, the same as other developing securities markets, is learning while going through the process of privatisation. But the country has its own problems.'' The regulation of the securities market was the most sensitive issue, Mr Loo said. Despite reluctance on China, he said the trend was for more US funds to look to Asia for direct investment. According to Hongkong Investment Funds Association estimates, there was about $100 billion of funds under management in the region. Mr Loo said US funds hoping to cash in on China's booming economy were now investing through New York-listed China funds or Hongkong companies traded on the over-the-counter market in the US. ''We have, included in our funds portfolio, equities in Hongkong companies such as Hopewell Holdings and HSBC Holdings. But these account for a very small portion of our total holdings,'' he said. However, the fact that only a 10th of the total US funds were invested abroad underscored the reservations US fund managers have towards other regions. On the US market, Mr Loo predicted that the social security system would change and that people would save more. Dean Witter is 80 per cent owned by US retail giant Sears, Roebuck and Co, but Mr Loo forecast the Chicago-based retailer would sell off its interest this year.