China Closed-end Fund Discounts Study

The discount of closed-end fund is one of the most concerns in economic research. The market price of the fund is often different from its net value, leading to observed discount. We briefly introduced the history of the closed-end fund in our country, and then, generalized the characteristics of the discount of closed-end fund phenomenon in China. We discussed the explanations of the discount of closed-end fund phenomenon in China's stock market with both theoretic and empirical study from three aspects: securities' liquidity capacity, expected performance and the investors' sentiment. In the course of analysis, we used the viewpoints from both traditional finance and behavioral finance. The conclusion is, the main reason of this phenomenon is the investors' sentiment, at the same time, the securities' liquidity capacity and expected performance also contribute to the discount.Finally, according to the conclusion, we gave several advices to decrease the discount level and then make the discount level become reasonable.