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Chinese investment fund sell-offs accelerating
Chinese mutual fund companies are experiencing their fastest rate of closures in eight years, driven by weak returns and investor withdrawals. This has led to the liquidation of approximately 256 funds this year, with over 300 more expected to shut down by year's end—marking the highest annual number since 2018. The decline follows a waning investor enthusiasm caused by falling returns and increased liquidations due to declining market prices, especially after the implementation of a 2023 initiative requiring funds to close if their assets fall below a certain threshold after three years. Additionally, the market is suffering from an oversupply, with more than 15,000 active products. Many new funds are postponing fundraising due to low demand, and the sector has been hurt by previous collapses and overall poor performance. This situation highlights the need to shift growth standards towards improving fund quality and reducing reliance on launching new products.
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