Asset managers in China are said to have begun fundraising for 6 Chinese “unicorn” funds on Monday the 11th of June by offering retail investors a new investment channel but possibly straining tight market liquidity.
The 300 billion yuan (USD $47 billion) plan stands to beat all the equity funds raised in China last year. The money is said to be used to fund mainland listings of homegrown technology firms such as e-commerce giant Alibaba Group Holding and smartphone manufacturer Xiaomi.
Following this, the introduction of 6 mutual funds could potentially weaken market liquidity in the short term and lead to more volatility. Furthermore, this would be the biggest move mad by the Chinese government since rescue funds were launched during the 2015 stock market crash.
A significant amount of Chinese technology unicorns are expected to launch initial public offerings in Hong Kong in the next 12 to 24 months, which may considerably boost liquidity in its capital market, according to chairman and chief executive for Asia-Pacific at JPMorgan, Nicolas Aguzin.