76 Chinese Investment Funds Liquidated Since End of June for 2.2 Closures Per Day

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New data indicates that China’s publicly offered funds have continued to post a woeful showing since the start of the second half.

Figures from East Money’s Choice Data (东方财富Choice数据) indicate that 76 investment funds in China have either launched or concluded liquidation proceedings during the period from the start of the second half to 4 August, for an average of 2.2 liquidations per day. 

The latest data follows a dire first half for Chinese investment funds during which 250 liquidations took place, exceeding total closures for the three year period from 2014 to 2017.

Structured funds and guaranteed funds have proven especially vulnerable, with four of each capsizing respectively since the start of the second half.

There are two main conditions for the liquidation of open end funds in China – the first being net assets of under 50 million yuan for 60 consecutive days, or the number of subscribers to the fund falling under 100 for 60 consecutive days.

According to Securities Daily there are 634 funds in China with net assets of under 50 million based on first and second quarter reports, putting them on the brink of liquidation.

Fund managers also have the right to announce the termination of fund contracts with the approval of the China Securities Regulatory Commission (CSRC).

China’s publicly offered fund products have seen steady growth since they were first launched in 2001.

2016 and 2017 saw the launch of 1225 and 980 funds respectively, while as of the end of the second quarter of 2018 the publicly offered fund market was host to 4974 products.

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250 Chinese Investment Funds Liquidated in First Half, Exceed Total Closures for 2014 – 2017 

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