CHINA - Around 14 fund managers are seeking approval to expand into China's rapidly growing short term bond fund market according to industry observers.
This comes despite efforts by the securities regulator to prevent a flood of new products. The move follows the successful launch of two short-term bond funds by Boshi and E-fund, two local managers, in the second half of 2005, reflecting strong demand for non-equity products amid a falling stock market in China.
A specialist research firm, Z-Ben Advisors, recently said at a conference in Hong Kong that a number of companies were in the queue, but the China Securities Regulatory Commission (CSRC) was taking a cautious approach.In a bid to prop up the equity market, the CSRC is believed to have pressed recent entrants, including the fund management joint ventures of Industrial and Commercial Bank and China Construction Bank, to launch equity funds as their maiden products.
The regulator also tightened the approval process for short-term bond funds, no longer classified as ‘mutual funds’. Analysts believe authorities are wary of a rapidly expanding fixed income sector.
HSBC Asset Management, which last week received approval to launch a joint venture with Shanxi Trust & Investment, owned by the Shanxi provincial government, is expected to launch its product in mid-February 2006. A Chinese fund management joint venture of AIG, the US insurance giant, is also expected to launch next year and has a good distribution network set up in China.
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