Shanghai rises on hopes for new funds

The mainland's securities regulator has decided to simplify fund approval procedures to direct a massive capital inflow into the weak stock market, heightening investors' hopes for a strong government-orchestrated rally.

The China Securities Regulatory Commission told a media briefing on Thursday it would facilitate fundraisings by the country's 60 mutual fund houses as part of efforts to deepen the market-based reform.

The commission will reportedly shorten the review period for new investment product applications, a move to enhance market liquidity.

The Shanghai Composite Index yesterday rose 4.32 per cent to close at 2,150.63 points on the news - its best single-day showing since October 2009.

The CSRC has previously fast-tracked mutual fund approvals in a bear market to shore up investor confidence.

The new policy could usher in dozens of new funds onto the market in the short term, analysts said.

Sources close to the CSRC said the regulator was under heavy pressure from the central leadership to underpin the weak stock market since severe losses by about 100 million retail investors could cause social chaos.