February 23, 2018 / 3:05 AM / a year ago

China state funds lifted equity holdings in market slump - official media

SHANGHAI, Feb 23 (Reuters) - China’s five state-backed mutual funds boosted their equity holdings during the recent stock market slump, the official Shanghai Securities News reported on Friday.

E Fund Ruihui Flexible Fund increased its equity exposure from less than 10 percent to over 60 percent, while Harvest New Opportunities Hybrid Fund boosted its stock holdings from less than 20 percent to around 80 percent, the newspaper estimated.

The newspaper said it made the calculations based on changes in the funds’ net asset values (NAV). The funds, which also invest in fixed income products, disclose asset allocations on a quarterly basis.

Hit by global market volatility and a slew of domestic factors such as margin calls and a deepening crackdown on shadow banking, China’s blue-chip index CSI300 tumbled 12 percent in a 10-session rout that started Jan. 29.

The five state-backed mutual funds, which also include ChinaAMC New Economy Flexible Fund, China Southern Consumer Vitality Flexible Fund and CMF FengQing Flexible Allocation Fund, were launched during the 2015 stock market crash to help stabilize the Chinese market.

The funds, which manage roughly 250 billion yuan ($39.1 billion) in total on behalf of the government, had been slashing their equity holdings since mid-2017.

Their boost in equity holdings during the recent market slump shows the funds still play a important role in stabilizing the market, the Shanghai Securities News said.

In another sign of government support to the market during the recent turmoil, an affiliate of China’s securities regulator on Feb. 12 encouraged major shareholders of domestically-listed firms to increase their holdings. (Reporting by Samuel Shen and John Ruwitch; Editing by Richard Borsuk)

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