China tightens scrutiny on $9.3 trillion fund industry
Reuters
Published Aug 30, 2021 02:20AM ET
SHANGHAI (Reuters) - China's top securities regulator pledged on Monday to crack down on mismanaged private funds and weed out fake ones, as the government becomes more assertive in dealing with an industry worth 60 trillion yuan ($9.28 trillion).
China has been seeking to channel more household savings into the capital markets to fund innovation and aid its economic recovery, while reducing the economy's reliance on bank lending.
Fund managers should align their interests more closely with investors, and refrain from hyping their products, Yi Huiman, chairman of the China Securities Regulatory Commission said.
"China is actively promoting high-quality growth of its capital markets, and healthy development of the 60 trillion yuan fund industry is a crucial part of it," Yi told a meeting held by the Asset Management Association of China.
Chinese mutual fund managers also face rising competition from global asset managers such as BlackRock (NYSE:BLK) and Fidelity International after regulators scrapped foreign ownership in the sector on April 1, 2020.
By July-end, the country's mutual fund industry stood at 23.5 trillion yuan, 1.6 times the size at 2016-end, Yi said.
The private securities fund sector doubled to 5.5 trillion yuan, and its private equity and venture capital industry tripled to 12.6 trillion yuan during the period.
Despite a recent cleanup of China's private fund industry, there're still many small and weak players hampering the high-quality growth of the sector, Yi said, adding that the regulators will publish new rules in due course.
Some private-fund managers even raise money publicly, and misappropriate clients' funds, he added.
Yi urged fund managers to prioritize clients' needs and interest, as "it happens from time to time that funds make money, but investors don't".
He asked money managers to address the issue of fund churning, in which fund salespeople, seeking higher commissions, encourage investors to redeem existing funds and subscribe to just-launched ones, resulting in massive fund flows.
($1 = 6.4671 Chinese yuan)
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.