Chinese authorities want to revive ailing stock market
39;Sponsored39; equity funds need only 1.4 mln to launch
Equity fund launches seen as precursor to bond fund approvals

SHANGHAISINGAPORE Jan 19 Reuters In the face of intense pressure from authorities to help revive a sickly stock market, Chinese fund management companies are increasingly launching equity funds that are bankrolled mostly by the firm39;s own money.

China39;s securities regulator has been nudging fund managers to prioritise, opens new tab the launch of equity products as authorities scramble to revive a stock market plumbing fiveyear lows.

In recent informal guidance, the regulator told some fund managers they needed to launch at least four equity funds before they open any new bond fund, in hopes of propping up the stock market in a way that some analysts think is unlikely to succeed.

Torn between the regulator39;s guidance and investors39; apathy towards equities in an ailing economy, mutual fund companies are increasingly setting up socalled sponsored funds.

Under Chinese regulation, fund management companies can kick off sponsored funds with just 10 million yuan 1.39 million of seed money that must remain in the fund for three years.

That compares to the normal requirement for new funds to have at least 200 million yuan, or nearly 28 million, of assets and 200 investors before the launch.

Fund performance is ugly and clients are suffering from losses, so money managers have to take money…