On the evening of February 2, 2026, Guotou-UBS Silver LOF (国投瑞银白银LOF) posted a revised net asset value of ¥2.2494 per share, down from ¥3.2838 on January 30 — a single-day fall of 31.5%, the largest one-day drop on record for a Chinese public mutual fund. The fund manager said the move followed a decision to revalue the fund’s holdings of Shanghai Futures Exchange silver contracts by referencing price moves in major international silver markets at 15:00 Beijing time.
Guotou-UBS explained that recent, pronounced divergences between domestic silver futures and international prices, together with sharp volatility in global markets, required a ‘‘reasonable re-estimation’’ of the fund’s asset values under guidance from the China Securities Regulatory Commission and the fund’s own contract. The fund identified specific contracts — AG2604, AG2605, AG2606, AG2608, AG2610 and AG2612 — as subject to the revised valuation method from February 2.
The Silver LOF is notable because it is the only public mutual fund in China that directly tracks silver futures listed on the Shanghai Futures Exchange. When trading resumed, the fund opened and immediately hit the daily limit-down, with sell orders piled behind a single-price ‘‘limit down’’ queue exceeding ¥80 billion. Market participants described the situation as a ‘‘stampede’’ driven by a collapse in the fund’s high trading premium and a simultaneous plunge in silver prices.
Chinese market chatter and participants from the fund industry estimate the LOF may face another three to five consecutive daily limit-downs as sellers try to exit positions. Those projections reflect not only the fund’s concentrated investor base and trading mechanics but also the severe liquidity squeeze that emerges when an instrument with high retail exposure gaps down sharply on the first day of trading after a revaluation.
The abrupt rout exposes a broader phenomenon: social-media-fueled arbitrage strategies that attracted many novice and younger retail investors. Viral ‘‘LOF arbitrage guides’’ and tutorials encouraged traders to exploit perceived price dislocations between the fund’s market price and its net asset value. That narrative has been supplanted by ‘‘how to survive limit-downs’’ instructions as investors attempt to salvage capital amid fast-moving forced sales and margin pressure.
The episode matters beyond one troubled fund. It calls for scrutiny of valuation practices for China-listed products linked to offshore or international markets, the design of exchange and fund trading limits, and the adequacy of investor protections for retail-dominated, levered or arbitrage-based strategies. For brokers, margin providers and clearing participants, the risk is operational and reputational: blocked liquidity and concentrated redemptions can cascade into broader market strain.
Regulators may be prompted to act, either by tightening rules around cross-market valuation and disclosure for futures-linked funds, by imposing curbs on retail marketing of complex arbitrage strategies, or by mandating stronger pre-trade risk controls. For investors and asset managers, the incident is a reminder that convergence between domestic contract prices and international benchmarks can be abrupt and costly when a homogenous investor cohort attempts to exit simultaneously.
Internationally, the immediate systemic risk to global silver markets is limited — physical and futures markets in major centres are deep — but the episode will attract attention from overseas investors and funds that monitor China’s onshore commodity ecosystem. The key takeaway for global participants is that China’s onshore instruments can behave differently from their offshore counterparts during periods of stress, and valuation frameworks that lean on cross-border references can introduce sudden realizable losses.