Chinese Fund Liquidations Surge Since Start of 2018


The number of Chinese investment funds that have entered liquidation has seen a sharp rise since the start of 2018.

According to figures compiled by a total of 124 Chinese funds have entered liquidation procedures in the first five months of 2018, as compared to 102 funds for full year 2017.

A further 22 funds have publicly convened investors’ meetings to vote on liquidation arrangements, for a total of 146 funds that have or are likely to be liquidated.

Data from financial data provider Wind indicates that this volume of liquidations is already 40% greater than the figure for 2017 as a whole, as well as 7 times greater than the figure for 2016.

Over 300 funds have been liquidated during the period from 2014 until the present, with 4 liquidations in 2014, 31 in 2015 and 18 in 2016.

In May alone a total of 56 funds announced that they had or were planning to launch liquidation proceedings, pointing to an acceleration in closures.

Mixed funds and bond funds account for over 90% of liquidated funds from the first five months of 2018, with 75 mixed funds and 62 bond funds either shutting or planing to shut down.

The list of capsized funds also includes 7 principal preservation mixed funds , 9 indexed funds and 2 money funds.

Industry insiders say that the lacklustre performance of Chinese capital markets alongside tighter regulation and an increase in small-scale “mini funds” (迷你基金) with less than 200 million yuan in assets are key factors behind the accelerating spate of liquidiations.

The wave of fund closures actually kicked off in earnest in the second half of 2017. Out of the 102 funds that were liquidated in 2017, 92, or over 90%, announced liquidation after 1 June.