Total assets of money market funds shrank 47 percent in the first half to 2.52 trillion yuan ($410.8 billion), figures compiled by China Galaxy Securities Co Ltd show.

Many investors shifted from MMFs into higher-yielding short-term instruments during the money squeeze in June, said Li Kui, a Shanghai-based fund manager.

Volatile interbank market conditions and tight liquidity have increased pressure on the net asset values of many Chinese MMFs, which are heavily exposed to the interbank markets and short-term bond markets.