China's burgeoning mutual investment funds recorded a sharp rise in net profits in the first half year, thanks to the recovering stock market, the Xinhua-run Shanghai Securities News reported on Friday.

 

Interim reports from 104 funds managed by 21 firms show they made a net profit of 26.21 billion yuan (US$3.29 billion) in the first six months, compared to a loss of 915 million yuan (US$115 million) in the same period last year.

 

The funds reported a total revenue of 27.83 billion yuan (US$3.49 billion) in the first half, 80 percent of which came from stock investment, the report said.

 

China's stock market began a recovery in May after two years of depression, with the Shanghai Composite Index rebounding from an all time low of 998 points to 1,600 points in just one week.

 

It is believed that the recovery is mainly a result of the smooth reform to transform non-tradable state-owned shares in listed firms to fully tradable shares.

 

Most of the listed firms have been restructured from state-owned enterprises. The reform should remove a major obstacle to returning the market to a healthy state.

 

The bullish market means that mutual funds which had invested heavily in the stock market have performed better in the first half year.

 

Analysis shows that 80 stock-oriented funds reaped a net revenue of 24.26 billion yuan (US$3.07 billion), accounting for 93 percent of the total for the 104 funds.

 

(Xinhua News Agency August 25, 2006)