Several bond funds in China have halted subscriptions or capped inflows as money surges into fixed income products at the expense of equities amid the current market volatility.
Last Friday, more than a dozen bond funds put in place measures to restrict new purchases, Reuters reported citing filings from fund managers.
The restrictions come at a time when equities have been struggling with China’s blue chip CSI 300 index down more than a fifth year to date due to sluggish economic growth, Covid-related lockdowns and an ongoing property crisis.
Chinese bond funds have seen their assets under management increase by 18% during the first seven months of the year to Rmb4.8trn ($664m), whereas the AUM for equity funds fell 7%, according to Reuters’ calculations.
At the same time, banks have been cutting their personal deposit rates offered to borrowers in response to the central bank’s easing measures, further increasing the appeal of fixed-income funds.
Meanwhile, Reuters also reported that Chinese regulators have asked several big mutual funds to avoid large stock sales ahead of next month’s Party Congress.
This so-called “window guidance” from regulators is fairly commonplace during periods of volatility or in the build up of major political events in China to help stave off market turmoil.
