China’s Pension Could Soon Get OK to Invest in Stock Market


China’s massive pension fund could soon be allowed to start investing in the country’s stock market, according to a Bloomberg report.

China is in the early stages of what many consider to be a bear market – a factor that may be driving the decision to let the pension fund begin putting its money in the market.

More from Bloomberg:

China will allow its basic endowment pension fund to invest in stock markets, according to draft regulations posted on the Ministry of Finance’s website.

The fund also will be allowed to invest in domestic bonds, stock funds, private equities, stock-index futures and treasury futures, according to the draft. The proportion of investment in stocks, funds and stock-related pension products will be capped at 30 percent of the pension fund’s net value, according to the proposed rules posted Monday.

Chinese stocks entered a bear market Monday, as the exodus of over-leveraged investors overshadowed central bank efforts to revive confidence with an interest-rate cut over the weekend. Chinese regulators are expected to take additional steps to steady the market, including possibly suspending initial public offerings.

“The access of the pension fund as a long-term investor will remarkably increase liquidity supply and will benefit the sustainable, healthy development of the stock market,” Wen Bin, a researcher at China Minsheng Banking Corp. in Beijing, said by text message. “The Chinese market will be stabilized by the policy.”

The pension fund manages $578 billion (USD) in assets.


Photo by  Horia Varlan via Flickr CC License

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