BEIJING, Oct.16 -- China mainland's stock regulator is drafting guidelines to curb rampant job hopping in its fledgling money-management sector as part of a move to assure investors that their funds would be properly managed, sources said.

The proposed rules may also penalize fund managers and their firms with higher compensation costs if either party decides to break contracts when the funds are still performing well, said people familiar with the matter.

Meanwhile, the watchdog will likely demand that fund ventures create a more comprehensive evaluation system to gauge their managers' work as well as bolster information disclosures, the sources said.

The get-tough stance over fund performance reflects challenges posed by poaching of a small pool of qualified money managers in the young but fast-growing capital market which has attracted an increasing number of middle-class investors.

Because of the limited number of qualified and talented managers, job hopping is common and the fledgling fund industry is hard pressed when these professionals bolt to big banks, insurers and brokerage houses seeking to earn more fees from managing part of the nation's 2 trillion U.S. dollars in household savings.

"The guidelines will likely serve as a prelude to more detailed regulations to govern the mainland's private banking and wealth management industries in the future," said Wu Zhiguo, a Guohai Securities Co analyst. "Regulators have a duty to stamp out vicious competition for talents."

A mainland money manager runs a fund for just about one year on average, a recent survey conducted by the Securities Times found out. More than 30 percent of local funds were managed by one manager for less than half a year, it said.

"The regulator hopes to build up an image of long-term, steady investment strategy for local funds," said a source briefed on the situation. "It doesn't want to give retail investors an impression of uncertainty, which could siphon needed capital out."

China's mainland saw its stock market recover this year after a four-year slump as regulators succeeded in conducting stockholding reforms at listed firms and prompted big share owners to repay embezzled funds.

Regulators are striving to prop up the fund management sector, which has swelled to over 60 billion dollars in assets in five years, as they plan to let the mainland's biggest overseas-traded firms sell shares at home.

The mainland fund industry had 54 firms, of which 21 were partly held by foreign investors, at the end of the first quarter, according to data from regulators.

Pay packages for local fund managers, especially for those working at foreign-funded ventures, are getting closer to Hong Kong levels, Reuters said, citing industry sources.

The information and news provider said an annual pay package of 200,000 to 400,000 dollars is typical for employees at Hong Kong fund ventures.

A junior manager at a mid-level Hong Kong firm could make from 130,000 to 190,000 dollars a year while a chief investment officer could make more than 1 million dollars, it said.

Losing talents may not be the only reason that causes fund firms to worry. When the industry matures, as surely it will, the charisma of fund managers will likely be a big attraction for investors and influence their investment decisions.

"You will probably see one day some fund firms may take legal action to restrain former star employees from disseminating client information and from poaching their customers," said Wu Ke, an analyst at Zhongtian Investment Consulting Co. "These things happening on Wall Street now will land in China's mainland sooner or later."

(Source: Shanghai Daily)