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Pension fund ups foreign stock play

By Zi Ben (China Daily)
Updated: 2007-01-26 10:15

China's social security fund plans to double its investments abroad to $1.6 billion in the first quarter as it seeks to boost returns and cover more retirees, the chief pension administrator said.

"We hope that returns will be reasonable enough to offset the rising exchange rate," said Xiang Huaicheng, chairman of the National Council for Social Security Fund (SSF).

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The fund had about $850 million invested abroad at the end of 2006, 80 percent of which was in stocks, earning about 2.02 percent on the investment, said fund spokesman Li Keping.

China's pension fund had a total of 19.5 billion yuan in investment income last year, representing a 9.3 percent yield, Xiang said, as the country's boomingShanghaiandShenzhen stock exchanges contributed returns of more than 50 percent.

Including another 44 billion yuan in unrealized gains in 2006, the fund posted a return of 29 percent last year, Xiang said. Domestic investments returned 3.1 percent in 2005.

Though half of the investment income was generated from the stock market, Xiang said the SSF does not plan to increase the proportion of equities, despite a market that soared 130 percent.

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