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Chinese stock market receives $251.8 bn capital from mutual fund investors

Investors have sold about 1.75 trillion shares in 862 newly launched mutual funds

Premium investors in China have injected $251.8 billion of capital in different Chinese mutual fund houses this year, media reports said. The move by these investors indicate their quest for equities despite a downswing in the stock market.

He Yan, a fund manager with Shanghai Shiva Investment, told the media, “The quick sale of mutual funds shows investors believe that the upwards momentum in A shares will continue. The strong buying interest in stocks and equity focused funds is also expected to continue.”

It is reported that as of this week, investors have sold about 1.75 trillion shares in 862 newly launched mutual funds year to date for $251.8 billion. The amount is larger than the 2015 stock market turmoil when $5 trillion in market capitalisation was wiped out by a stock market rout. After registering a nine month high of 130 percent, China’s Shanghai Composite Index slumped by 43 percent between June and August. The current stock market results have put many investors in a grim situation.

The current investment spree by investors indicate a bullish market situation following the government’s successful containment of Covid-19. However, it will be interesting to see how new investors react upon the current market conditions.

It is reported that this month a series of fresh funds stopped subscriptions before expiry dates after fulfilling sales targets earlier than expected. Yinhua Fund Management, a Shenzhen-based firm closed a new product this week after hitting unexpected sales.

Majority of the global stock markets have been down since the outbreak of Covid-19.

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