Chinese feverish investment in funds is sweeping what McKinsey & Co Inc.
describes as the world's fastest growing funds market.
of three new funds were sold out less than one hour after their issuance in the
past two weeks, raising nearly 30 billion yuan, according to reports.
A billboard for a fund is seen in
Haian, East China's Jiangsu Province March 10, 2007.
The mania looks like an early confirmation of McKinsey's prediction about
China's funds industry. The country's assets under management in the funds
market may top US$1.4 trillion by 2016, making it the world's fastest-growing
market, the New York-based consulting company said Wednesday in a report.
Funds managers currently run US$156 billion in the country. If the prediction
came true, that would represent an average annual increase of 25 percent.
The growth will be driven by consumers seeking higher returns than those
offered by bank accounts, the McKinsey report said.
Last year, the Chinese citizens kept some 79 percent of their personal
financial assets in cash and in banks, where one-year deposits yield 2.52
percent a year, because of a lack of investment alternatives, McKinsey said.
However, a change is on the horizon after a bull run drove up China's stock
markets by more than 130 percent last year, helping the funds reap an average
gain of more than 50 percent. The gains of certain funds invested in stocks even
reached 150 percent.
The lucrative profit allured many Chinese citizens who rushed to get hands on
the new funds. On February 26, crazy investors bought up the 10 billion shares
of the Jianxin Optimized Collocation Funds within one hour.
That sales speed was nothing compared with the Huitanfu Growth Focus Funds,
which was sold out in ten minutes, raising some 10 billion yuan.
The investment enthusiasm could also be seen from the newly opened stocks and
funds accounts. A total of 760,000 investor accounts were opened on March 6 and
7, including 165,000 stock accounts and 595,000 funds accounts, official
statistics showed. That equaled the amount for a half year in the last few
In face of the investment craze, central bank governor Zhou Xiaochuan Monday
advised retail investors to learn something about finance while pledging to
develop the financial markets.
The institutional investors have a large room for development in the country,