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. Last Updated: 07/27/2016

Shanghai Exchange Admits 3 Funds

SHANGHAI -- China's decision to let three investment funds list on the Shanghai stock exchange, the first approval in three years, shows it wants more long-term funds and less speculation, brokers and fund managers have said.

The three closed funds, totalling 300 million yuan ($36 million), were set to be listed Friday. They were sold in 1993 to primary and secondary school teachers who had thought that the funds would be listed, thereby making them tradable.

But Beijing banned new fund listings, citing the lack of a developed market and proper regulations, leaving the teachers holding certificates that could not be transferred or traded.

"Beijing wants to channel more bank savings into investment funds," said Shao Jiejun, a manager at Shenyin Wanguo Securities, which manages the Baoding Fund, one of the three to be listed.

"Personal bank savings are estimated to reach 5 trillion yuan at the end of this year," he said.

"The better off already have all they need for their daily life. Funds are an important investment channel for the stock market in addition to individual investment in stocks," he said.

A Chinese broker said the authorities want to reduce the short-term, speculative element in stock market trading that is often responsible for wide fluctuations in price unrelated to the performance of the company.

"The market needs a wide variety of investment channels, including funds which take a longer-term view than individuals, so we become nearer a situation where a company's performance determines its price," he said.