China regulator tells fund managers to keep quiet

By George Chen

SHANGHAI, July 25 (Reuters) - China's securities regulator has ordered fund managers to refrain from making public comments about the benchmark index's .SSEC loss of more than half its value from its October peak, according to a notice distributed to fund houses.

China Securities Regulatory Commission, China's securities industry watchdog, issued the notice dated July 24 to the country's fund houses, including joint ventures with foreign banks such as HSBC Holdings Plc (HSBA.L) (0005.HK) and JPMorgan (JPM.N), to order fund managers to be careful when making public comments.

"We want to remind all the fund companies to strengthen your management of external comments to produce and maintain the good image of the fund industry," the CSRC said in the notice obtained by Reuters on Friday.

"To those who disobey the rules or have (negative) social impact, those companies should take responsibility for the results," the CSRC warned.

The notice didn't indicate whether the rules to control fund managers' comments would be permanent or temporary, but two senior executives at major fund houses told Reuters that they believed the rules were intended for the period of the Beijing Olympics, from Aug. 8-24.

"Stability is the top priority to the regulator and everything that the regulator does is just for the sake of a harmonious and successful Olympic games," said one of the two fund executives.

"It's China and the Olympics, so we very much understand the regulator's decision," he added.

The two fund executives declined to be identified due to the sensitive nature of the notice.