Chinese zest for QDII products fade
Updated: 2008-01-19 14:02
Chinese investors are getting cautious about investment in overseas stock markets, as evident by ICBC Credit Suisse Asset Management Ltd's inability to raise enough money for its new Qualified Domestic Institutional Investor (QDII) fund.
However, unlike the first batch of QDII funds, which were fervently pursued by investors and usually far over-subscribed on their first day of issue last year, the ICBC Credit Suisse QDII fund has not received such a reception.
Investors haven't shown much zest for the new offering and ICBC Credit Suisse insiders said they were worried the fund cannot reach the planned scale before the subscription period ends.
Analysts attributed QDII's fading appeal to "bad timing", as major stock markets around the world have felt the effects of the US subprime crisis.
There is also fear profits from US dollar-based financial markets will shrink as the greenback depreciates against Chinese yuan.
So far, four QDII products -- JP Morgan Fund QDII, Harvest Overseas Fund, Huaxia Global Selected Stock Fund and Southern Global Enhanced Balanced Fund -- have been issued in China.
By January 11, all four stock-oriented QDII funds saw their net value fall below one yuan, the value set for fund subscriptions, with the total losses amounting to 14.43 billion yuan.
The Harvest Overseas Fund reported a net value of 0.859 yuan on January 11, the lowest of the four.
"The losses have apparently dampened domestic investors' passion for overseas investment," said Xie Weihong, international business supervisor with the China Southern Fund Management Co Ltd.
Despite the dwindling attraction of QDII products, seven domestic securities firms have recently acquired QDII status and are making preparations for new products.
Xie said QDII funds may gain ground in future by focusing on new emerging capital markets in countries such as Brazil, Russia and India.
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