E Fund Management Co, China's fifth-largest mutual fund company by assets, is launching a fund under the country's qualified domestic institutional investor (QDII) scheme next Monday.

The fund, the first under the QDII umbrella after a 17-month suspension in China, will target companies listed in Asian stock exchanges and equities of Asian firms listed on bourses outside the region. It will be publicly sold from Dec 7 this year to Jan 15 next year, E Fund said on its website yesterday.

The Guangzhou-based fund management firm received the approval from the China Securities Regulatory Commission (CSRC) to launch its QDII fund on Nov 12, after the State Administration of Foreign Exchange (SAFE) approved quotas of $1 billion to E Fund and $500 million to China Merchants Fund under the resumed QDII scheme in late October.

"The bullish trend prevailing on the bourses makes it ideal to launch QDII products now," said Zhang Gang, a fund analyst with Southwest Securities.

The Hang Seng Index, the major investment target market for QDII products, has climbed nearly 50 percent during the first 11 months of this year.

China launched its first batch of QDII products in 2006. But it ran into rough weather as investors suffered considerable losses and saw face value of their investments plummeting.

To ward off potential risks overseas on the back of global financial crisis, SAFE stopped issuing QDII quotas since last May after granting Bank of Communications Schroders Fund Management a $2 billion QDII quota. The regulator had issued $5 billion worth of quotas to four fund management firms in 2007.

"We will see more QDII products being issued in the future as the global economies have started to show signs of recovery," Zhang said, but cautioned that investment risks are still high as the global recovery is shaky.

"We have started preliminary work for our QDII product, but haven't received the CSRC's nod yet," said Cao Yijun, a spokeswoman from China Universal Asset Management Co Ltd.

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