China's mutual fund industry rebounds as investors cash in on the country's soaring equities market, with new funds being quickly finished by investors who once spurned the stock market's "too high risk."

Investors had shied away from stocks since the financial crisis in 2007. The rebound is seen as a successful venture of policymakers who had been trying to build investor confidence in equities. The new demand would pressure China to prevent this fresh rally from imploding.

Like Us on Facebook

In the first two months of the year, about 75 funds, composed of mainly equity and balanced funds with both equities and bonds, were issued. This raised CNY110 billion (US$17.7 billion), according to Z-Ben Advisors, a Shanghai-based fund consultancy firm.

More than half, at around 35 funds, accumulating less than CNY50 billion were created in 2014.

Market gains of over 50 percent in 2014 and 13 percent this year have rekindled interests for mutual funds.

"People are rushing into mutual funds because many think it's just the beginning of an unprecedented bull market," remarks Mark Zeng, analyst at Howbuy Wealth Management, a consultancy firm that assists mutual fund companies sell products.

The risk of investing in stocks has shrunk on the back of anticipated monetary easing in the near term, accompanied by more reforms to state enterprises, and a wealth shift from real estate to stocks, notes Brokerage Shenwan Hongyuan.

Shenwan Hongyuan forecasts the Shanghai Stock Exchange Composite Index hitting the 4,500 mark this year, 22 percent higher than last Friday's close of 3,691.10.

"The worst time for China's stock market is over, and there's high probability that the market will continue to rise," mulls Pan, a mid-40year old Shanghai office manager.

Pan and other investors and managers are taking cues from the government, believing authorities are okay with the current rally. Less has been heard about share bubbles, and more about incoming and growing liquidity improve investor sentiment. 

Tagsmutual funds