A Study On The Discount Of Closed-end Fund In China

Since closed-end fund puzzle was proposed by pratt in 1966, scholars have devoted a lot on the study of the discount of closed-end fund, which means its price of market trade is lower than the net value of assets. It has been a very puzzling problem in the financial field for a longtime. The study of the phenomenon of closed-end fund devaluation is not only a theoretical study and interpretation of phenomenon, but also helps us to further understand security market and the behavior and mind of investors. The closed-end fund once was exchanged at a premium when it first appeared in 1998, but when it comes to 2002, the closed-end fund began to exchange at a price far below its net value. In order to promote the development of closed-end fund, the Security Regulation Authority launched series of policies in 2007 to encourage the issuing of new closed-end fund.This paper first analysis the basic characteristics of closed-end fund devaluation in our country briefly. Then we discussed the explanations of this phenomenon with theoretic and empirical study from traditional economic factors, and then we introduced the factor of new closed-end fund to strengthen the model founded before.Several factors are chosen to demonstrate the fund devaluation of our country. By way of multi-variable analysis, the essay finds that five factors combined are able to give a satisfactory explanation to the devaluation.At last, we make some policy suggestions from two sides to further the development of new closed-end fund.