Saturday, March 29, 2008

Minsheng Bank liquidates QDII fund

China Minsheng Banking Corp Ltd<600016> announced to liquidate a product invested in Hong Kong funds after the product's value plunged more than 50%.

The Beijing-based bank launched the one-year fund last October under China's qualified domestic institutional investor (QDII) scheme. It sold a total of 100 million shares at RMB 1 (US$0.14) apiece. According to the terms, the lender is required to liquidate the fund if its value declines below 50% of its initial price.

Retail investors may likely to choose to sign a supplemental contract that they can still hold the product until the expiration date of this October, sources reported.

The QDII fund is the first to be liquidated. The latest statistics showed that domestic QDII funds all fell at an average loss of 30% in book value in the turmoil caused by the U.S. subprime mortgage crisis. Bank of China<601988><3988> became the first bank to halt its QDII products in February 2007.

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