Regulators try to gag fund managers

In an attempt to prevent any kind of market fluctuations and “sell offs” leading up to the Beijing Olympics, the China Securities Regulatory Commission (CSRC), China’s securities watchdog, distributed a notice to fund managers, including Sino-foreign joint ventures, warning fund employees not to say anything publicly that could harm the stability of the market.

"We (CSRC) found some companies and employees have made improper and inaccurate comments to the media recently, which has negatively affected the industry, … Fund companies must better monitor speeches by employees."

In particular, fund managers were told not to make any “negative comments” relating to the market, especially since the market had fallen by over 50% since its peak in October 2007. The government often deploys policy and administrative tools to regulate the market, including cutting stamp tax duty to boost trading while curbing the number of IPOs to restrict excess liquidity in the stock market.

Earlier this month, CSRC also pressed top executives at local fund management firms and securities brokerages not to travel abroad until after the Olympics so they can monitor and control any market fluctuations.

Some individual investors have raised questions about the abilities of some Chinese fund managers, most of whom have less than 10 years of industry experience but who are sometimes responsible for more than RMB10 billion yuan ($1.47 billion) in assets.