GUANGZHOU (Fund China) – A “short” cold mood circles over the stock market since a two days continual sell-off. Then what would the fund managements, the biggest institutions invested into A share market, do to deal with such an unexpected “cold”.

The current market’ sell-off will remind investors ZhaoDanyang liquidation issue who was called God father of China private offering fund though he declared that that is because A share market lacks of adequate safety currently at the beginning of the new year. Ironically, his issue did not wake up any chain reaction, public funds and private fund are all optimistic to the market cautiously and insistently. However, the market seems to do not accept their hot passion. A share’s big sell-off seems to go further out of some institutional expectation.

Obviously, many fund managements are more and more anxious about the declining tendency in the market. A fund company insider said that his management would not make any further comments as the A share sell-off shows that the current market is prone to the “short” side and too much uncertainty in the market.

China International Fund Management indicated that A share’s big sell-off was caused by the continuous downtrend in the surrounding countries’ market leading to a heavy fear over investors. Besides, Central Bank has decided to raise its deposit reserve ratio last week. This tight monetary policy will affect investors’ psychological expectation. “as the tight monetary policy has created a certain impact on investors psychological expectation, the deposit reserve ratio is expected to raise further properly possibly.” China International Fund Management said.

China International Fund Management adds that the recent adjustment shows that as the uncertainty of U.S. economy and domestic capital is extending, the debate of short or long view will be clear further. And a part of institutions is taking back their views of the after market performance previously or indicate other views since the market is filled with pessimism.

Some fund managers said indeed they have done some acts to reduce their position holdings. One fund manager said, the share position holding of the fund he in charge of now was reduced to 40% which is on the high side of the funds’ current share position holdings since a continual share position holding reduction was adopted in his fund management.

Indeed, at present, some fund managements’ fund share position holding is cut to 40%, some fund industry source said, however, some fund managements with larger management asset relatively value more about ‘timing’. Some have taken big adjustments of their fund at the early Jan. “as far as I know, a part of fund managements’ fund share position holding only 50%.” A fund manager said.

Copyright Fund China 2009.

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