Quick Take: CDR Funds Fall Short of Investment Contribution Cap

Individual investors have placed about 70 billion yuan ($10.8 billion) in six government-appointed equity funds for the purchase of Chinese depositary receipts (CDRs). This fell short of what they were allowed to raise, Caixin learned from multiple sources.

The funds are expected to be officially launched on Thursday after going through regulatory checks, which are currently underway. Private investors were able to place their money in the six funds from June 11 to Friday, while institutional investors were able to do so on Monday.

The China Securities Regulatory Commission (CSRC) put a 20 billion yuan cap on the total amount that each fund can raise from private investors on June 10.

The regulator encouraged the six funds to attract institutional investors such as pension funds. The funds have created accounts for institutional investors, Caixin learned; however, it’s unclear at the moment how much capital that institutional investors have placed in the funds.

Earlier this year, Chinese regulators changed their attitude toward the domestic listing of Chinese tech firms and said they welcome overseas-listed tech titans to come back home to domestic bourses via CDRs in an attempt to make them available to Chinese investors.

After Chinese smartphone-maker Xiaomi decided to postpone its issuance of CDRs on the Chinese mainland market — which would have been the receipts’ debut — all eyes are on how the multibillion-yuan funds will be used when the first CDRs are issued.

The six fund managers are Shenzhen-based China Southern Asset Management Co. Ltd., Beijing-based China Asset Management Co. Ltd., Guangzhou-based E Fund Management Co. Ltd., Beijing-based Harvest Fund Management Co. Ltd., Shanghai-based Huitianfu Fund Management Ltd., and China Merchants Fund Management Co. Ltd., a subsidiary of China Merchants Bank.

Contact reporter Pan Che (chepan@caixin.com)

To read more about Chinese depositary receipts, click here