Firms set to launch overseas stocks fund

Firms set to launch overseas stocks fund
Last Updated(Beijing Time):2007-05-17

China Southern Fund Management Co and its US asset manager partner Mellon Financial will likely launch a fund to invest in overseas stocks as early as this month, industry sources said yesterday.

The product, the second of its kind for Chinese mainland fund firms, is set to pool up to US$1 billion and place assets in funds globally as well as Hong Kong-listed shares, according to people informed of the matter.

Chinese financial authorities have been boosting moves to channel domestic capital overseas as they aim to ease growing liquidity pressures and help cool booming stock markets at home.

Last Friday, rules were relaxed to allow commercial lenders to invest as much as 50 percent of funds in the qualified domestic institutional investors program, or QDII, in overseas stock markets.

So far a combined US$13.4 billion of QDII quotas has been granted to 15 mainland banks. Hua An Fund Management Co, partnering Lehman Brothers, is the only fund company in the QDII scheme which has an investment limit of US$500 million.

Officials at China Southern Fund and Mellon were not available to comment yesterday.

The sources said that the regulator, China Securities Regulatory Commission, is now drafting detailed rules to govern the participation of fund management firms in the QDII program, a move to broaden the business to more companies.

The regulator is also considering letting stock brokers launch similar QDII products to buy overseas stocks and bonds, according to the sources.