Daiwa’s China Fund Raises $300 Million as Investors Seek Growth

Daiwa Securities Group Inc. said its fund that invests in China’s yuan-denominated ‘A’ shares has raised the 30 billion yen ($300 million) it was targeting, as Japanese sought alternatives to slumping local equities.

Tokyo-based Daiwa, Japan’s second-biggest brokerage, said it stopped accepting internet applications last week for the Daiwa China A Fund, which begins business tomorrow and is run by Daiwa Investment Asset Management Co. China’s A shares are available only to the nation’s citizens and to qualified foreign institutional investors.

“Sales of investment trusts in January and February weren’t good, so we had some doubts about sales,” said Ryuji Sato, General Manager at Daiwa’s Investment Trust Department. “We can expect China’s government to move quickly on the economy, and our clients see the rebound in A-shares as a chance to recover their investment losses.”

The Shanghai Composite Index, which tracks the city’s A shares, climbed 22 percent this year, the best-performing major index in Asia, according to data compiled by Bloomberg. Japan’s Topix Index is the second-worst performer, with an 11 percent slump.

In November, mutual funds sold in Japan that invested in China-related equities had a net inflow for the first time in 11 months, according to Daiwa Fund Consulting Co. As of the end of February, the 41 funds managed 350 billion yen, a 10 percent increase from the previous month.

China was named a “noteworthy” equity market by 47 percent of individuals surveyed last month by Rakuten Securities Economic Research Institute, topping the poll. India followed with 32 percent, and the U.S. was third with 28 percent.