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China's individual investors are increasingly turning to mutual funds as a major investment channel, boosting the country's fund sales.
Two securities Investment Funds, the Citic Funds-classic Allocation Fund and the Fortis Haitong Income Fund, netted over 10billion yuan (US$1.2 billion) each from their sales, 80 percent of which was purchased by individual investors, according to sources from the two companies.
Institutional investors used to play a major role in buying fund units, but now, "individual investors have become the main buying force", said Zhao Hongyu, marketing manager of Citic Fund Management Co., Ltd.
As the government pushes the opening-up and stable development of China's stock market, individual investors, who are at times victimized by bad corporate governance, in-house trading and improper information release, are becoming more confident about the prospects of stock investment, such as buying securities investment funds.
Other funds, Zhao said, like principal guarantee funds, are also popular among individual investors, whose fund buying desire is boosted by an average 20 percent economic return of last year's fund market.
"It's common in foreign countries to put personal assets in the hands of professional institutions. Some in China have begun to accept the investment mode."
Against inflation expectations and low interest rates at present, part of the 11.06 trillion yuan (US$1.3 trillion)of individual banking deposits has also started to flow to the stock market via fund purchase.
Market analysts believe eight funds issued last month, including the Citic Fund and the Fortis Fund that reached record sales for the first time in the Chinese mainland so far, will start to buy in stocks from late March.
According to Chen Shaosheng, Fortis Funds manager, believed companies mainly engaged in steel, petroleum, electricity, auto production, finance, telecommunications would be popular with fund management companies.
By the end of 2003, 32 fund management companies had been established in China, with 112 securities investment funds on the market.
(Xinhua News Agency March 19, 2004)
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