THURSDAY, JANUARY 17, 2002
China's pension funds to enter stock market
PTI THURSDAY, JANUARY 17, 2002
BEIJING: China's social security fund, worth $7.5 billion, is ready to enter the stock market for the first time, a newspaper report said on Thursday.
Preparations are in the final stage as the newly founded National Executive Council of Social Security Funds, legal keeper of the country's welfare and pension funds, has invited applications from investment institutions bidding to run the funds, the China Daily said.
Country's Ministry of Finance and Ministry of Labour and Social Security have jointly released a provisional rule that only 40 per cent of the funds can be used to buy shares in the secondary market.
Experts said the accession of the funds would augur well for both the market and the social welfare system in the long run.
Practice of western capital markets has proven that social security funds are an important institutional investment that plays an anchor role in maintaining the stability of the market, the report noted.
The number of elderly people in China is estimated to peak around year 2030.
Buying stocks will optimise the investment portfolio of the country's social security funds, which used to be dominated by less profitable bank deposits and treasury bonds.
About 61.6 billion yuan ($7.5 billion) is likely to flow to the secondary market in the initial stage, a trivial sum compared to the overall value of the market which is more than four trillion yuan ($483 billion).
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