Mainland Chinese mutual fund houses have this year raised a record amount of fresh capital from individual investors, who have shown an increased appetite for equities amid expectations of a further rally in stocks. As of Monday, these companies had sold about 1.75 trillion shares in 862 newly launched mutual funds year to date for 1.75 trillion yuan (US$251.8 billion). This amount exceeds the number raised in 2015 – before a stock market rout wiped out US$5 trillion in market capitalisation – according to data provider Wind Information. Between June and August that year, the Shanghai Composite Index crashed 43 per cent after a nine-month rally that had driven up the market by more than 130 per cent, leaving millions of small investors with losses. The current mutual fund buying spree is being viewed as a sign of mainland investors’ bullishness about the market following Beijing’s successful containment of Covid-19. “The quick sale of mutual funds shows investors believe that the upwards momentum in A shares will continue,” said He Yan, a fund manager with Shanghai Shiva Investment. “The strong buying interest in stocks and equity focused funds is also expected to continue.” China Fund , a subsidiary of the state-owned People’s Daily newspaper , reported recently that a batch of new funds halted subscriptions before their expiry dates this month after meeting their sales targets earlier than anticipated. Shenzhen-based Yinhua Fund Management, for instance, closed a new product on Monday, the first day for subscriptions, after hitting its sales target of 10 billion yuan. Will China stocks outperform gold, which has risen 33 per cent this year? A fund managed by Wanjia Asset Management, which aimed to raise 3 billion yuan for investment in ChiNext-listed stocks, also halted subscriptions on Monday, two days ahead of an expiry date, after its fundraising target was met. Some analysts have, on the other hand, said a further rise in stocks might be limited and expect the Shanghai Composite to meet resistance at the 3,500 level, which is within 4.6 per cent of the index’s Tuesday close. “Regulators need to caution investors about the risks ahead, if the market shoots up quickly,” said Wang Feng, chairman of Shanghai-based financial services group Ye Lang Capital. “As profit-taking sets in, a boom-and-bust scenario is likely to occur.” Hang Seng Index rallies, Tencent gains after big slide over US targeting of WeChat The Shanghai Composite has advanced more than 11 per cent this year, spurred by an influx of capital that is betting on a strong economic recovery and earnings growth after China successfully contained its coronavirus outbreak. On July 9, the benchmark closed at 3,450.59, its highest level in 2020, which represented a 13 per cent gain over last year’s close. It retreated 7.4 per cent to 3,196.77 on July 24, because of concerns about a potential bubble. However, the gauge rebounded by more than 6 per cent to hover around the 3,400 level on August 6, after talk of a sustained economic recovery once again boosted investors’ confidence in the market. China’s economy became a bright spot in the global economy when it expanded 3.2 per cent in the second quarter of this year, driven mainly by huge spending on infrastructure.