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Pension funds to improve Equity stakes
by Richard YorkThe $70 billion national pension fund that has been approved is believed to improve the equity stakes in the domestic companies. It is also supposed to boost the investment that is there in the infrastructure industry, the national pension chairman Dai Xianlong said on the 29th of February.
He also said that, even though many other international pension funds are trying belligerently into various other investments the national pension is going to stick on to real estate investments. This, he said, is to make sure that the equity stakes that are there in the Chinese companies would be boosted.
The government of China is now exploring the relocation of listed company equity stakes into the NSSF (National Council for Social Security Fund). This they are trying to do so as an alternative source of income for the pension agency.
The fund it had the previous year had earned a lot more than 110 billion Yuan on the investments it made. The returns it got on these investments were more than 30 percent as the stocks had gone sky high in the mean time. During that time China’s CSI 300 index was the best performer in the international arena. During the year 2007 CSI 300 index had made a gain of 162 percent in the local currency.
If the returns improve this year the agency that is based in the city of Beijing would be able to expand its area of coverage to more number of people living in the country as the average age of the people go up. The total population of the country in the early period of 2008 was almost 1.3 billion.
The fund invests in four different classes of assets: fixed income, currencies, stocks and equity stakes. The chairman of the agency reported that the agency was following a very cautious approach to investing in the stocks. He also said that the company had no more plans to increase its roof on purchasing the equities. Dai however did not bother to give the allocation division of the asset classes.
In the previous years the pension agency had invested in many of China’s infrastructure industry as it is believed to offer much good, long term low risk chances to make more gains out of it. The main focus of the pension agency has remained on the domestic sector rather than the international arena.
It however does not mean that the company does not have plans to expand into the international arena the agency said that it will do so gradually in the near future itself. The company as of now is quite happy to play stakes in the national market. Another thing the agency wants to avoid is a loss related to sub prime loans.
Since the international companies started competing in the insurance sector after the government clashed a restriction which constrained the pension agency based in Beijing to only the domestic markets. This is one of the things that is limiting the pension agency from playing on the overseas markets.
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