What is regarded as the major obstacle to the growth of the mutual fund industry?
The biggest stumbling block to the development of the mutual fund industry, in China, is the lack of adequate information on listed companies and the shortage of good investment targets. A history of minimal shareholder supervision has led to widespread market rigging, misappropriation of funds, and false reporting. Many traders still illegally trade on their customers' margins. China has instituted key reforms in the past year, including requirements for quarterly reporting, independent board directors, and information disclosure for insider trading and auditing. Though a 2001 order requiring listed companies to engage foreign auditing firms was rolled back because of pressure from domestic accounting firms, regulators recognize the shortfall in the number of Chinese certified public accountants and the need to professionalize the industry as quickly as possible.
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