Bank of China closes QDII fund as yuan appreciation speeds up - report |
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Tue, 13 Feb 2007 08:24
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SHANGHAI (XFN-ASIA) - Bank of China (SHA 601988, HK 3988) has ended a fund product that invests clients' funds overseas because the appreciation of yuan has limited returns, state media reported.The fund was terminated about five months after its launch because its size was smaller than the minimum requirement for 20 consecutive days, as the yuan's faster appreciation added momentum for investors to scramble for redemption, the official Shanghai Securities News said.China launched the Qualified Domestic Institutional Investor (QDII) scheme last year to allow approved financial institutions to collect clients' yuan funds and convert them into foreign currencies under quotas for overseas investment.But analysts said the QDII products got a lukewarm reception, largely due to the limited returns on offer from products with restricted investment parameters and the prospect of the continued appreciation of the yuan.The fund offered by Bank of China raised 578.5 mln yuan at its launch in July but shrank to less than 200 mln yuan as of Jan 12, the News said.The annualized return of the fund was no more than 1.3 pct as it was driven down by the currency appreciation, it said.The fund would would be liquidised within 20 working days from tomorrow, the News said, citing a statement from Bank of China.The return on another QDII product offered by China Merchants Bank (SHA 600036, HK 3968) was negative, the paper also reported.(1 usd = 7.8 yuan)qionghui.feng@xinhuafinance.com
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