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Social security fund to invest overseas
By Zheng Lifei (China Daily)
Updated: 2005-11-10 06:08

China's massive social security fund is waiting for the "right time" to invest in overseas capital markets, but the initial amount invested will not be that much, a senior official said yesterday.

"We are choosing the right time to make overseas investment," said Xiang Huaicheng, chairman of the National Council for Social Security Fund.

"The initial investment will not be a big one, but it (the investment scale) will expand gradually," said Xiang, China's finance minister from 1998 to 2003.

Xiang made the remarks yesterday at the two-day 2005 Asian Pension Fund Roundtable, which closes today.

He said the council has already begun preparing for its overseas investment project, which has been a hot topic in financial circles for months.

But the former finance minister admitted that detailed rules concerning the scheme have yet to be approved by the State Council, China's cabinet, which in February last year gave the green light for the fund to invest in overseas markets.

Earlier media reports said the fund would make its first investment in foreign capital markets as early as July this year.

However, this never happened, raising suspicions among some market watchers that the National Council for Social Security Fund may have come up against problems relating to the overseas investment scheme.

Cheng Weiqing, a fund analyst with CITIC Securities, said stagnation in the domestic stock markets may be the main reason behind the prolonged overseas investment process.

"At a time when many are blaming the bearish market on a shortage of funds, the National Council for Social Security Fund and the government as a whole faces pressure if they divert funds into foreign markets, which may make them cautious about moving on with their overseas investment plan," Cheng said.

The National Council for Social Security Fund, which was set up in 2000, had 192.1 billion yuan (US$23.7 billion) of assets at the end of last month.

It had made 115 billion yuan (US$14.2 billion) worth of investment in the domestic capital markets by the end of September.

Beginning in 2003, the annual Asian Pension Fund Roundtable aims to discuss issues facing the pension funds industry in Asia.

It is organized by the Asian Foundation and the Pacific Pension Institute, two US-based non-profit organizations.

This year's event has seen participants from 23 countries, mainly Asian ones. The theme was "Demographic pressures in Asia, driving retirement system reform and capital market development."

(China Daily 11/10/2005 page10)



 
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