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SHANGHAI: Chinese money is pouring into Japan-focused equity funds as the Nikkei Stock Average hits a 33-year high, prompting fund managers to repeatedly warn of market risks.

Two Shanghai Exchange Traded Funds (ETFs) tracking the Nikkei 225 Index have attracted very enthusiastic interest, with prices well above net asset values.

ETF managers E-Fund Management and China Asset Management (China AMC) warned investors of the risks for the third time in a row in Tuesday’s trading.

In separate statements, each mutual fund company “warned investors to pay attention to price premium risk in the secondary market.”

“If investors invest blindly, they can suffer huge losses.”

The Nikkei Stock Average is up 19% this year, and foreign investors in particular are attracted by strong corporate earnings and signs of economic recovery.

Chinese investors are pouring money into a handful of ETFs investing in Japanese stocks under the QDII foreign investment scheme.

Huaan Mitsubishi UFJ Nikkei 225 ETF has more than doubled its assets under management this year to 123.5 million yuan ($17.52 million).

Demand is also reflected in the price premium for ETFs, which can be bought and sold like stocks.

The E-Fund Nikko AM Nikkei 225 Index ETF’s premium climbed to 23% last Friday, but fell after fund managers issued warnings. The fund’s size has grown by nearly 60% this year.

The premium for China AMC Nomura-Nikkei 225 Index ETF rose to 18% in the secondary market on Friday. Chinese money flows into Japan-focused fund, triggering risk warnings

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