The first joint venture fund management company with involvement from a State-owned commercial bank was approved by regulators on Saturday, the China Securities Regulatory Commission (CSRC) said on Monday.

The firm was jointly initiated by the Industrial Commercial Bank of China (ICBC), the biggest State-owned bank, Credit Suisse First Boston (CSFB) and China Ocean Shipping (Group) Company (COSCO), one of China's leading shipping and logistics companies.

The joint venture has registered capital of 200 million yuan (US$22.4 million), with 55 per cent from ICBC, 25 per cent from CSFB and 20 per cent from COSCO.

Market observers said the timing of the approval could be seen as a signal from the regulator to stimulate the sluggish market.

Last Friday, China's shares hit 1,000.52 points during the day following CSRC's announcement that it would expand the non-tradable share sale experiment to more domestic-listed companies. On Monday the shares broke through the key 1,000 points baseline.

The establishment of bank-invested fund management firms might cheer up traders a little, but it cannot offer a fundamental cure for the market's ailment, said Dong Chen, a senior analyst at China Securities.

Finding a way out of the doldrums depends on resolving the irrational share structure, reshuffling of brokerages and the dispelling of uncertainties in the macro economy.

Moreover, the establishment of bank-invested fund management firms does not mean there will be capital injection into the stock market from the banks, said Yang Qingli, an analyst at CITIC Securities.

Confidence in the market weighs heavily on the money pool the new fund managers will collect, she said.

(China Daily June 8, 2005)