With millions of Chinese rushing to invest in stocks and mutual funds, the nation’s top securities regulator is urging fund managers to improve their risk controls so that the market does not overheat, Reuters reports.
A number of governmental measures have revived the securities market in China, most notably the removal of a previous ban on trading $250 billion worth of state-held shares.
So far this year, China’s market has risen 80%.
“Facing a rapid development of the industry and market, all fund management companies should keep cool-headed and should not chase instant success and quick profits,” the China Securities Regulatory Commission advised.
“We should clearly identify some problems while the market is development, such as fund managers putting undue emphasis on fund scale, ignoring management skills, blindly pursuing investment returns and neglecting risk mitigation and liquidity issues [and] exaggerating past performance.”