Concern over the volatility of China’s stock market coupled with unscrupulous brokers and a growing confidence in the expertise of mutual fund managers is prompting many of the nation’s investors to move their money from stocks to funds, the International Herald Tribune reports. In fact, assets in Chinese mutual funds jumped 83% to $110 billion in 2006, helping to boost performance.
But those outsized returns are giving China’s regulators concern that investors may be ignoring risks.
“Many new investors still don’t know how to manage risk, and we need to prevent another crash,” said Zhu Jian, director of the China Securities Regulatory Commission, referring to the 55% decrease in the Shanghai Stock Exchange Composite Index between 2001 and 2005. “We want to hit the brakes a bit.”