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Bipolar day for Yinhua Securities

(ATF) On the same day Yinhua Securities was winning prizes at China’s 17th Golden Bull Awards for the Chinese fund industry, the company put out a short and terse statement.

The announcement was headlined: “Yinhua USD Debt Select Bond Securities Investment Fund (QDII) Suspension of Large-Scale Subscription (including regular fixed investment) Business.”

The announcement on the QDII – Qualified Domestic Institutional Investor – no longer accepting the aforementioned subscriptions was a short one-line note directing those concerned to visit the company website.

“Yinhua USD Select Bond Securities Investment Fund (QDII) Class A Fund Units and C Fund Units on a single day from the 31st of the month shall not exceed 1 million yuan. If it exceeds 1 million, the fund manager has the right to partially or completely reject the application (including regular fixed investment) of Yinhua USD Debt Select Bond Securities Investment Fund (QDII). If a single fund account purchase of the Fund exceeds 1 million yuan in a single day, the Fund has the right to confirm the failure of the purchase,” the company stated.

Meanwhile on the same day, Haitong Securities’ statistics on the growth of net value of equity funds run by 126 public fund managers in 2019, Yinhua Fund ranked first among large and medium-sized fund companies, with an average equity return of 57.01%. 

Looking at it over longer periods, Yinhua’s equity products’ three-year absolute return reached 45%, ranking 10th among 101 comparable companies. Over the past five years, absolute returns reached 101%, which saw it rank 10th among 73 comparable companies.

In addition to company awards, it also picked up the “weight of the seven-year Golden Bull Fund Award”, which was given for the first time this year.

It is not clear why Yinhua suspended the QDII fund during this time of high market volatility, but they do have several new Golden Bulls to furnish the office.

QDII funds under scrutiny

Meanwhile, China’s QDII funds are under scrutiny with their every move being criticized in detail. Insiders say the QDII funds are sweeping for crumbs in order to protect the interests of investors and limits on quotas, while existing fund companies have suspended large-scale subscriptions for their stock-based QDII, bond-based QDII and other funds, and issued multiple risk alerts.

In order to protect the interests of fund shareholders, QDII funds in the bond market recently issued a purchase restriction. On March 23, Huaan Fund issued an announcement that two China USD Income Bonds were limited to daily trade of 10,000 yuan. 

On March 24, Huaxia Fund issued an announcement saying it would set a cumulative purchase limit of 5 million yuan per day for the Huaxia Greater China Credit Select Bonds, and a limit of US$700,000 for Class-A USD shares.

An industry insider told the International Financial News that short-term market adjustments are accelerating. When purchasing passive index funds, one should not only focus on the rise and fall of net worth, but also consider factors such as fund investment operations and domestic and overseas markets. 

Chris Gill

With over 30 years reporting on China, Gill offers a daily digest of what is happening in the PRC.


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