A Research On The Discounts Of Closed-end Funds In China

At present, almost all the closed-end funds in China trade at discounts. This thesis tested foreign discount theories on Chinese closed-end funds. The positive analysis shows, agency costs, capital gains tax liabilities, illiquidity of assets and anticipated managerial performance can not explain discounts of closed-end funds. In fact, not fundamental factors but investor sentiment appears to be the driving force of dynamic fund discounts in our country. Next it is put forward that investor sentiment has different usefulness and characteristic under different factors such as mature degree in market, investment idea, structure of investors, size of funds etc. Furthermore a time-series regression presents that the relationship between changes in fund discounts and net redemptions of open-end funds is not significant, which is the same to stock prices index. As for the background behind investor sentiment, the author thinks it lies in the defect of institutional arrangement about funds.