China stock fund draws 1.5 bln yuan amid caution

SHANGHAI, Feb 18 (Reuters) - China Southern Fund Management Co raised about 1.5 billion yuan ($209.4 million) for a closed-end fund launched for sale on Monday, a spokesman said, reflecting limited buying interest in domestic stock funds.

The amount raised on Monday for the fund -- China's first stock fund product launched in five months with a targeted size of 8 billion yuan -- was a far cry from the first half of last year when stock funds were routinely snapped up by investors and several times subscribed on the day of their launches.

For example, China International Fund Management received nearly 90 billion yuan in subscriptions in April last year to a new equities fund in a single day -- more than 10 times its original sales target.

Investors have turned cautious about buying domestic currency A shares and stock funds due to concerns about a possible U.S. recession, increasing stock supply and inflation. The benchmark Shanghai composite index .SSEC has fallen 25 percent from a record high in mid-October.

In an apparent bid to stop the local stock market sliding more, China early this month approved the launch of two stock-focused mutual funds, including the China Southern fund, to raise up to a combined 14 billion yuan, ending an informal five-month freeze.

The China Securities Regulatory Commission suspended the approval of new stock mutual funds in the second half of last year for fear of feeding a frenzy that made Shanghai one of the world's hottest big bourses last year.

Beijing tightly controls the pace of fund launches in a bid to stabilise the stock market which has to absorb listings of a large number of big state owned enterprises.

On Friday, China's securities regulator approved the creation of another two new stock-focused mutual funds to raise more than 20 billion yuan.

China Southern said in a statement late on Monday that demand for its new stock fund met active demand, but it did not provide a figure.

A company spokesman said the fund drew subscriptions of more than 1.5 billion yuan.

The recent weakness in foreign stock markets as a result of the U.S. subprime crisis has also taken its toll on China's overseas stock funds launched under the Qualified Domestic Institutional Investors (QDII) scheme.

The four QDII funds that raised $4 billion each from domestic investors late last year have fallen below their par value.

ICBC Credit Suisse Asset Management Co Ltd, Credit Suisse's (CSGN.VX) China asset management venture, said this month it had raised just 3.15 billion yuan ($439.7 million) for China's fifth QDII fund against a previous target of $3 billion.

(Reporting by Charlie Zhu; Editing by Rory Channing)