DOMESTIC mutual fund houses are restricting or suspending subscriptions in outbound oil and gas related funds following the precipitous plunge in global oil prices earlier last week.

Crude oil prices dropped around 25 percent earlier last week after Saudi Arabia started a price war and said it was ramping up production, having failed to persuade Russia to join OPEC in cutting output as demand has fallen due to the impact of the COVID-19 pandemic on the global economy.

Hwabao WP Fund Management Co., partly owned by U.S. private equity firm Warburg Pincus, said it would temporarily suspend trading, while E Fund Management Co., one of China’s largest asset managers, suspended investments. Both funds said their moves were aimed at protecting shareholders.

Some funds also cited foreign exchange quota restrictions for introducing curbs on fresh investments.

Funds’ investments outside China fall under its Qualified Domestic Institutional Investor program, which permits registered Chinese financial institutions to invest a limited quota of funds in foreign financial assets.

E Fund Management said it would suspend subscriptions and regular fixed investments into its Crude Oil Securities Investment Fund from Wednesday onwards due to foreign exchange quota restrictions.

And GF Fund Management Co. said it adjusted the subscription limits of its GF Dow Jones U.S. Petroleum Development and Production Index Securities Investment Fund from Wednesday onwards to “protect the interests of fund shareholders.”

The funds did not say when their curbs would be lifted.

Hwabao WP Fund Management suspended trading for its S&P Oil and Gas Upstream Stock Index Securities Investment Fund for an hour Wednesday last week.

“Recently the fund’s net value and its secondary market price has fluctuated sharply, while high premiums continue to show on the market,” it said in a statement. (SD-Agencies)