China Closed-end Fund Discounts Study

The discount of closed-end fund means its price of market trade is lower than the net value of assets. It has been a very pondered-over problem in the financial field for a long time, called it "Puzzle of the closed discount fund ". Compared with closed-end fund of other security markets of the world, the phenomenon is more obvious in our country and has already become the focus that numerous scholars have paid close attention to.This paper briefly introduced the history of the closed-end fund in our country, and describing the characteristics of the discount of closed-end fund. Then we discussed the explanations of this phenomenon in China's stock market with theoretic and empirical study from three aspects: the traditional economic factors, investor sentiment and liquidity. Meanwhile, we get several suggestions about promoting the development of our country's close-ended fund, making trade price of fund get rational level and Standardizing the management of the fund company. In addition we discuss the future development path of the close-ended fund of our country.In the research of this paper, we get several main conclusions as follow.(l)The liquidity lack of fund market is the main reason that cause the discount of closed-end fund of our country.(2)The investors sentiment hypothesis, which is generally accepted in the western countries, can not be very good explaining the discount of the closed -end fund of our country, mainly because institutional holder of close-ended fund is getting more and more, the individual investor reduces gradually.(3)The traditional factor based on basic side has certain explanation strength to the discount of close-ended fund of our country. Asset liquidity of fund, market factors, bonus factor are relevant to discount of closed-end , and fund scale , the volatility of fund price are not correlated with the discount of the fund, but fundachievement, fund cost, and morals factor don't contribute to the discount.