Cash flows into China funds fuel fears of 2015 boom-bust repeat

The highest decision-making body of the Zimbabwe African National Union-Patriotic Front said it endorsed a decision to “eject Old Mutual from the financial system” and to shut down the country’s biggest mobile-money platform, Ecocash.

The institutions have caused “runaway inflation through illegal parallel exchange-market rates,” the party’s acting spokesman, Patrick Chinamasa, said after the meeting in Harare.

The government wants to stop companies from using differences in the 175-year-old insurer’s share prices in London, Johannesburg and Harare to determine a potential forward rate for the currency.

Measures that were being considered included suspending Old Mutual’s shares from the local bourse, having the securities traded in dollars, or moving it to a planned foreign- exchange based market, people familiar with

LONDON - Investors poured the most cash into China funds since July 2015, BofA said at the weekend, even as fears grew of a repeat of the 2015-16 bubble that saw the benchmark Shanghai index fall more than 40 percen from its peak in just a few weeks.

Last week’s $6.1 billion directed into China funds was the second largest ever, BofA added, citing data from EPFR global.

Chinese funds also led equity inflows, receiving inflows equal to 2.5 percen of assets under management, compared to just 0.1 percen globally, the bank said.

Shares in the blue-chip CSI300 index have risen to levels not seen since the 2015 bubble, supported by hopes of an economic recovery, a conducive regulatory environment and retail investor enthusiasm.

Chinese state-run media, previously encouraging the rally, warned that investors should respect the market, manage risks and pursue rational investments, after regulators published a list of illegal margin lending platforms in an apparent move to calm markets.

That paused the stock rally on Friday, the session ending lower for the first time since June 29, after the country’s state funds announced stake cuts in companies.

“It’s not the first time we’ve seen moves of this magnitude and it doesn’t typically end well,” said Craig Erlam, senior market analyst at OANDA. –REUTERS.