China’s Investment Funds for the Rich Shrink for First Time in Four Years
* Stock funds’ assets under management fell by 109 billion yuan last month to 2.28 trillion yuan
* Private funds have had a hard time attracting money this year as China’s financial markets wrestle with a bear market in stocks, tough new asset management rules, and a national campaign to reduce debt
(Beijing) — China’s private fund industry lost ground for the first time in nearly four years in October, as shaky markets and a regulatory crackdown made life harder for fund managers.
The industry’s assets under management dipped by 31.3 billion yuan ($4.51 billion) last month to 12.77 trillion yuan, according to data from the Asset Management Association of China (AMAC), an industry self-regulatory body overseen by the securities watchdog. The number of newly issued funds that trade securities rebounded in October, but stock funds’ assets under management plunged by 109 billion yuan to 2.28 trillion yuan.
It is the first time the figure has declined since January 2015, when the AMAC first began tracking the size of the private fund industry. The contraction contrasts the industry’s once-booming growth. China’s private fund industry tripled in size over the past three years due to lack of regulation and bold investment tactics.
The classification for private funds, known in China as “private investment funds,” includes stock funds, private equity funds and venture capital funds. They are distinct from other investment vehicles because they are limited to raising money from no more than 200 individuals or institutions, each of which must contribute at least 1 million yuan.
Though broadly well-received by wealthy investors due to their fat returns, private funds have had a hard time attracting money this year as China’s financial markets wrestle with a bear market in stocks, tough new asset management rules, and a national campaign to reduce debt that has led to a crackdown on “shadow banking” practices linked to private funds.
The benchmark Shanghai Composite Index has been hovering around four-year lows amid the haunting uncertainty of a prolonged China-U.S. trade war and other problems. The new asset management rules further restricted who can invest in private funds by increasing how much in financial assets they must hold from 3 million yuan to 5 million yuan.
The private fund industry is also under greater regulatory scrutiny. In one case this year, private equity firm Fuxing Group was found to have bilked investors out of billions of dollars. In another notorious case, Xu Xiang, a high-profile billionaire private hedge fund manager, was sentenced to five and a half years in prison for manipulating stock prices.
Contact reporter Leng Cheng (firstname.lastname@example.org)
May 28 16:02
May 28 12:52
May 28 09:10
May 27 16:43
May 27 13:27
May 27 12:54
May 26 17:38
May 26 17:03
May 26 12:26
May 26 10:44
May 26 03:26
May 25 17:58
May 25 16:46
May 25 12:39
May 23 06:20
- 1China’s ‘Bat Woman’ Warns Coronavirus Is ‘Just Tip of the Iceberg’
- 2Update: Mass Testing in Wuhan Uncovers Over 200 Asymptomatic Covid-19 Cases
- 3Flying to China Still a Challenge as Authorities Extend Restrictions
- 4New Huawei Sanctions by U.S. Are Less Than Meet the Eye, Lawyers Say
- 5Update: China Scraps GDP Growth Target, Boosts Budget Deficit Amid Coronavirus Pandemic
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas