China's securities regulator was to allow fund management companies to invest their own money in mutual funds in the latest effort to boost the stock market, domestic media said Thursday.
The move may help fund managers use their capital more efficiently, promote the sales of mutual funds and boost investors' confidence, an unidentified securities official was cited as saying by the Shanghai Securities News.
Under the old rules, fund management companies could only spend their own money to set up and operate funds and to invest in treasury bonds. With the rapid expansion of the industry, many companies' money went untapped, the official said.
Fund management companies holding more than 50 million yuan (US$6.04 million) in net assets could invest up to 60 percent of that money in mutual funds, according to new rules released by the China Securities Regulatory Commission, the paper said.
Following the new regulations, up to 2.8 billion yuan of fund managers' money could flow to mutual funds, the paper said. The amount, however, is a drop in the sea of the US$390 billion yuan-denominated A-share market.
China's shares jumped more than 8 percent Wednesday, the biggest single-day rise in three years, as mutual funds bought large-caps after the government urged them to help rescue a market lingering near eight-year lows.
Security house sources said regulators had convened senior executives in the country's around US$40 billion mutual fund industry, telling them the government would support the market and urging them to build positions.
(Source: Shenzhen Daily/Agencies)