ICBC Credit Suisse Asset Management Co announced today it would split the ICBC Credit Suisse Core Value Fund on November 16, the first fund split approved by the China Securities Regulatory Commission (CSRC) following its latest notice on fund risk management issued November 4.
The CSRC notice urged fund companies to avoid blind expansion. The document impacted the domestic stock market noticeably, and a few funds halted continuous sales following the notice.
The Shanghai Composite Index dropped eight percent from November 5 to 9, the biggest weekly decline in the past nine years. Newly raised capital of funds can provide more investment products with reasonable valuation.
New funds' approval work has also restarted, according to fund companies. No new fund was approved by the CSRC after China Asset Management Co's Innovation Fund in August. Dozens of new fund plan have been submitted to the CSRC, said sources.
ICBC Credit Suisse will sell 10 billion yuan of the fund, valued at one yuan (13 US cents) per share, through the Industrial and Commercial Bank of China Ltd (ICBC), Bank of China, and China Merchants Bank. ICBC Credit Suisse, China's first fund firm controlled by a bank, held assets of nearly 55 billion yuan at the end of September 2007.
This year, fund splits have been the most prominent sales pattern. According to statistics, there were 37 fund splits in the first 10 months of this year, and seven in July alone.
ICBC, China's largest bank by assets, holds a 55 percent stake in ICBC Credit Suisse. Credit Suisse Group holds a 25 percent stake, and China Ocean Shipping (Group) Co, the country's largest shipping firm by capacity, holds the remainder.
The ICBC Credit Suisse Core Value Fund, fund venture's flagship product, was set up in August 2005, and achieved a return on investment of 142.69 percent in 2006. The fund's net value reached 4.1163 yuan as of November 9, 2007.
(China Daily November 14, 2007)