By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-09-12 14:19

China's first stock-oriented fund under the qualified domestic institutional investor (QDII) program was launched by China Southern Fund Management Co Ltd today, the Beijing Daily Messenger reported.

The fund is available to subscribers as of today at many banks including the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, China Merchants Bank, Bank of Communications and Post Savings Bank of China. Subscription will close on September 28.

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The fund has an initial sales charge of 1.5 percent. It differs from existing QDII funds in that it will be available for redemption and purchase daily after a maximum three-month lock-up period. And its net asset value will be published every trading day.

The new fund can invest 100 percent of its assets in global stock markets, instead of investing only in low-risk, low-return bond and currency markets, according to an earlier Shanghai Securities News report.

It can invest in 48 overseas equity markets, out of which the ten most valuable markets will be carefully selected for key investment.

Currently, the ten markets include the developed markets of the United States, Japan, China's Hong Kong, Switzerland and Italy, as well as emerging markets of Russia, India, Brazil, Malaysia and the Republic of Korea.

In developed markets, the fund is aiming for steady average income in the long term by investing in ETFs, while in emerging markets it will mainly invest in ETFs and mutual funds. In Hong Kong, it will directly invest in stocks.

The Chinese government has tried to encourage investment in overseas markets since 1996 in an effort to curb excessive liquidity.

Last year, the Shanghai-based Hua An Fund Management Co Ltd became China's first fund management firm to be allowed to invest overseas as a pilot QDII, with a quota of US$500 million.

Its first QDII product, launched in November last year, raised US$197 million and yielded five percent over the subsequent six months.

So far, a total of seven funds have gained government approval to conduct QDII business.