BIZCHINA / Center
QFII fund suffers from US$1.79b redemption
(chinadaily.com.cn)
Updated: 2007-06-28 14:27
Overseas investors should be prepared for the volatility of the Chinese
stock market.
Recent data shows the FTSE/Xinhua ishare A50 China Fund, the largest fund
raised by Qualified Foreign Institutional Investors (QFII) on the
mainland A-share market, suffers from the largest amount of redemption of
the past four months.
By June 25, a total of 82.6 million shares worth HK$14 billion (US$1.79
billion) according to the fund's latest unit net worth, were withdrawn
from the fund in the past four months.
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1st quarter
The latest flood of redemption occurred on Monday, June 25, when
investors withdrew 18.2 million shares of the fund, worth HK$3 billion
within a day, almost comparable to a close-end mutual fund of the A-share
market.
In fact, large-scale redemptions worth more than five percent of the
total fund capital occurred frequently in the past five months.
Records show the scale of the ishare A50 fund peaked on March 1 this
year, when its total assets reached nearly HK$20 billion, with a total
volume of 152.4 million shares. However, a redemption trend has begun
since then. Some believe the February 27 plunge of the A-share market
greatly shook investors' confidence.
Fortunately, the mass redemption of the ishare A50 won't seriously impact
the A-share market because the fund is run by means of an arbitrary
mechanism developed neither in the mainland or Hong Kong, and therefore
doesn't flow money directly into the A-share market. Meanwhile, the
limited investment quota of QFII also eases the pressure from redemption
on individual institutional investors.
(For more biz stories, please visit Industry Updates)
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