SHANGHAI, Sept 24 (Reuters) - A growing number of bond
funds in China have suspended taking subscriptions or capped
inflows, amid signs money is gushing into fixed income products
as stocks wobble and banks cut deposit rates.
On Friday alone, more than a dozen bond funds announced
measures to restrict new purchases, according to fund managers'
filings. Around 40 short-term bond funds made similar statements
in the past 20 trading days, according to Chinese newspaper
Xia Haojie, bond analyst at Guosen Futures, said bond funds
looked increasingly attractive for investors at a time when
banks are lowering their deposit rates.
China's top five state lenders cut individual deposit rates
last week, a move that could help bring down lending rates
further to aid the economy. The rate cuts came on top of
reductions in certain deposit rates in April.
A bond fund manager, who declined to be named, also
attributed the flight to bonds to a bearish stock market, and a
tendency to seek shelter ahead of the week-long Chinese National
Day holiday that starts Oct 1.
China's blue-chip index CSI300 has tumbled more
than 20% so far this year amid gloomy economic prospects.
China Asset Management Co said in a statement about a bond
product on Friday that it would reject individual subscriptions
exceeding 1 million yuan ($140,300) a day to protect the
interest of existing fund holders and strengthen stability of
Huatai-PineBridge Fund Management Co said in a separate
product statement that it would suspend accepting fresh
Chinese bond funds have already seen their assets under
management (AUM) jump 18% during the first seven months of the
year, to 4.8 trillion yuan, the latest data shows.
In contrast, AUM of equity funds and balanced funds, which
invest in both stocks and bonds, dropped 7% and 14% respectively
during the same period.
China may need to cut banks' required reserve ratio (RRR) in
the fourth quarter to keep liquidity ample, the official China
Securities Journal reported on Saturday, citing economists.
Easier monetary conditions could push bond prices higher.
Chinese investors are also boosting investment in offshore
debt under the Bond Connect scheme as U.S. interest rates and
the dollar rise sharply.
($1 = 7.1266 Chinese yuan renminbi)
(Reporting by Samuel Shen, Jason Xue and Brenda Goh; editing by