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China one step closer to investing up to $290 bln in pension funds in markets
December 7, 2016 / 3:48 AM / 9 months ago

China one step closer to investing up to $290 bln in pension funds in markets

BEIJING, Dec 7 (Reuters) - China has selected 21 investment management institutions for its pension insurance fund, bringing it one step closer to investing up to $290 billion in its financial markets.

The investment management institutions include some of the country’s biggest asset managers, insurers and investment banks, such as China Asset Management Co., Ping An Insurance, and CITIC Securities, the National Council for Social Security Fund (NCSSF) said on its website on Tuesday.

The announcement came just days after it appointed four custodian banks as custodians of the pension insurance fund, which was seen as signs that the government was speeding up on pension fund investment.

Former Chinese finance minister Lou Jiwei was appointed chairman of the NCSSF in late November, as China is working to reform the fund as the population ages and obligations are set to rise.

Before investment can start, those management institutions would need to submit applications and get approval on what financial products can qualify, state newspaper the Securities Daily reported on Wednesday, citing an unidentified NCSSF staff member.

“How long that will take depends on the overall arrangement,” the person was quoted as saying, without elaborating.

The NCSSF is expected to sign the first investing contracts with an initial batch of provincial governments before the end of this year, China’s Ministry of Human Resources and Social Security said during a briefing earlier in October.

In August last year China said it would, for the first time, allow pension funds to be invested in stocks and other assets. widening a scope until then restricted to lower-yielding bank deposits and treasuries.

The paper estimated 2 trillion yuan ($290 billion) is available for investment by the fund, which had a massive reserve of 3.99 trillion yuan ($579 billion) by the end of 2015.

But initial investment would be limited in the short-term and is not expected to have a significant impact on the stock market, it said.

“It’s more important that there is long-term investment going into the market and boost market confidence,” China Asset Management Co. Investment director Yang Kun was quoted as saying.

China’s stocks have struggled for much of this year after a crash in the summer of 2015 that at one point wiped out more than 40 percent of their value. (Reporting by Yawen Chen and Nicholas Heath; Editing by Kim Coghill)

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