* China funds expect copper surplus in 2014 - execs

* Recent price rebound has led some to hedge by going long in Shanghai

* Global copper prices up 9 pct since March, but down over 6 pct this yr

By Polly Yam

HONG KONG, May 16 (Reuters) - Chinese commodities funds are considering initiating new short positions on the metal after its recent bounce, betting on a surplus in the market, fund industry executives said.

Bearish bets by these secretive Chinese funds, which are mostly privately run with money raised from wealthy individuals, helped drag global copper prices to near four-year lows in March.

Their new short positions could prevent the metal from adding to a 9 percent rebound it has seen on shortage of spot supplies in China, the world's top consumer.

"Many of them (funds) are waiting for an opportunity to open short positions again," said an executive at a Shanghai-based private fund, adding that about half of the previously held short positions had been closed out after the prices rose.

The funds expect that the global copper market will have a surplus this year, said the executive, speaking on condition of anonymity because he was not authorised to talk to media.

Funds active in China's copper futures market include Zhejiang Dunhe Investment Co, Flowinvest China Commodities Trading, Yihui Investment and Shanghai Chaos Investment Co Ltd, brokerage sources have said. ID:nL3N0MA46T

Up to a quarter of electronic trading volume on the London Metal Exchange (LME) comes from Asia-based participants, with Chinese funds exerting a growing clout in the market, as seen by the March rout. LME copper prices are down more than 6 percent this year. ID:nL3N0MA46T

UNDERLYING DEMAND WEAK?

The global copper market is expected to be in a 228,000- tonne surplus by the end of 2014, according to a Reuters poll of 26 analysts last month. ID:nL6N0N63HR

Fund industry executives said the recent rebound in LME copper prices CMCU3 would be short-lived, since the gains have been driven by temporary supply tightness in China after large smelters exported more than 100,000 tonnes. ID:nL3N0NV3JE

Spot Chinese prices got another boost after the State Reserves Bureau entered the market in March-April to scoop up at least 200,000 tonnes of bonded stocks. ID:nL3N0NF2A5

Those moves, however, underscore weakness in underlying demand, which is expected to persist as China's economy slows, said a senior analyst at a large Chinese private fund based in Shanghai, who declined to be named because he was not authorised to talk about the firm's strategy to the media.

China might miss its economic growth target for the first time in 15 years as data points to a sharper-than-expected loss of momentum. ID:nL3N0O00SC

After the recent partial rebound in prices, some funds are hedging at least some of their short LME copper positions by going long in the domestic Shanghai Futures Exchange.

The price of copper in Shanghai SCFcv1 has risen 12 percent from March and is unlikely to fall sharply soon due to the domestic supply shortage, triggering purchases by some funds in Shanghai, said Zhou Jie, senior analyst at China International Futures (Shanghai).

But the longer term trend is still down, some say.

"We expect copper prices to have ups and downs in the near term and fall longer term. Our view has not changed much," said a trader at another large fund based in Shanghai and active in copper markets.

(Editing by Fayen Wong and Muralikumar Anantharaman)

((polly.yam@thomsonreuters.com)(+852 2843 6933)(Reuters Messaging: polly.yam.thomsonreuters.com@reuters.net))

Keywords: CHINA COPPER/FUNDS