GUANGZHOU (Fund China) - The closed-end funds’ gross discount rate hits the historical lowest, declines to 16.22% up to last Friday. The dividends expection is still the strong drive engine for the closed-end funds rise and the dividend expection market condition is expected to remain for some time. It is noticed that the closed-end fund with dividend expection will be the main taget for the short-term capital’s going in and going out. Investors should pay more attention and be more prudent in the dividend market condition.

A general decline of the discount rate

Last week the shanghai and shenzhen exchanges’fund index broke the record again and again in the 3 straight days rising 4.5% to 5302 and gainning 4.87% to 5224 driving by the stock market rise last Friday.

There are 35 funds gainning the exchange records last week. And due to the only 3 trading day, the weekly exchange volume is about 2.4 billion share unit, smaller than general level with a gross Turnover Rate 3.14%. And from the daily exchange volume, the exchage activity is downing in some extent with a 0.8 billion share last week and 0.98 billion share two weeks previous. All the 35 funds rosed.

The shanghai and shenzhen exchanges the cloesd-end fund gorss net value rose 2.79% last week and the overall fund market value was up 6.48% leading to a large decline of gross discount rate, and setting up the historical lowest record. The overall cloesed-end funds’ discount rate decreased to 16.22% last week. The less-than 3 years expiration short term fund’s gross discount rate moved up to 6.49% and the more-than 3 years expriation long term fund’s gross discount rate declined to 17.71%.

And the innovative closed-end funds, The UBS SDIC ruifu classification equity fund gained a 5.5% premium and the Dacheng Selected equity fund with a 12.45% discount rate up to last week.

The key investment point

As a good harbinger in the 2008 stock market in the new year,it is noticed that the A-share market’s centralized Negative stage may be over in a short term.

The domestic macro economy long-term prosperity remains unchanged settling down a good foundation for the A share long term bullish market. The long term invest feedback of the equity fund with long position strategy worths concern.

On the other hand, the 2008 stock marekt’s fundamental structure will be obviously different with the previous peroid. The equity fund will experiece a greater fluctuations in 2008 investment porfolio layout, and the fund net value growth will be difficult to surpass the index in such a period but it is expected to gain a Favorable Turn latter.

Last week the closed-end funds plate rose sharply, exceeding the object asset average net value growth rate, leading to a obviouly decline in the discount rate. The main drive engin for the fund growth is still the strong dividend expection and it is predicted to be remained for some time. Meanwhile, from the historical experience, the closed-end fund with a dividend expection will be the main aim for the short term capitall going in and going out. As the“closed-end fund switching to open-end fund”is becoming more and more viable, the short term capital will play a greater impact on the closed-end fund. It should be more prudent in the operation during such a market condition.

From the Investment strategy, the departure degree between the initiative equity fund net value recent fluctuation and the market index volatilization is obviously visible. The holding proportion adjustment stratng from an eary beginning is still going on. It is said that the equity fund with a established porfolio investment could be continued to hold and for the new investment porfolio establishment, it is better for investors to select the porfolio that can refect the main market movement after restructuring.

Copyright Fund China 2008.

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