China's 'sunshine funds' may get Shanghai listing green light
Shanghai exchange boss signals loosening of grip on hedge funds after two decades of caution towards the investment vehicles
The Shanghai Stock Exchange might let the mainland's hedge funds list on the bourse amid efforts by the country's securities regulator to boost institutional buying.
Bourse general manager Zhang Yujun told a seminar this week that the exchange would "boldly map out" new measures to better serve institutional investors. According to a fund manager at the seminar organised by the Shanghai exchange, Zhang said the hedge funds, known on the mainland as "sunshine private trust funds", would be allowed to register with and list on the bourse to broaden its reach to retail investors.
He did not give a timetable for the implementation. Zhang's reported remarks are a clear sign of a positive stand on developing hedge funds. Until now Beijing has encouraged institutional buying on the equity market by giving priority to the development of mutual funds, which raise money via public offerings.
At the end of last year, the country's mutual fund houses managed total assets of 2.2 trillion yuan (HK$2.69 trillion). The mutual funds, or securities investment funds, are listed on the nation's stock exchanges and are attractive to individual investors.
But the China Securities Regulatory Commission (CSRC) has a tight grip on hedge funds - offered privately to wealthy investors - due to worries that their aggressive investment strategies could cause market volatility. It was not until 2004 that the mainland approved its first hedge fund while allowing hedge fund managers to raise capital only through trust firms.
Mainland hedge funds had about 150 billion yuan in assets under management by the end of last year, less than 7 per cent of the mutual funds' asset value.