Economy
Mainland pension fund to increase investments abroad
(Agencies)
Updated: 2010-06-18 10:04
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Chinese mainland's pension fund plans to increase overseas investments in stocks and bonds, including securities in Taiwan, to boost returns as global markets recover from the financial crisis.
The fund also aims to buy stakes in unlisted companies outside the mainland, including firms from Taiwan, Dai Xianglong, chairman of the National Council for Social Security Fund, said in Taipei Thursday. He didn't name targets.
Cross-straits ties reached their warmest in 60 years after Taiwan leader Ma Ying-jeou took office in May 2008 and abandoned his predecessor's pro-independence stance, and the two sides have since eased restrictions on investments in each other's banks, brokerages and insurance markets. The mainland pension fund's assets expanded by 38 percent last year to 776.5 billion yuan ($113.7 billion), as a rally in the nation's stock market boosted returns and the government contributed more funding.
The pension fund may also form fund management ventures with Taiwanese partners, Dai said without providing details. Ma's administration has said a trade pact or so-called Economic Cooperation Framework Agreement, or ECFA, may be signed by the end of this month.
Euro, Dollar
The euro will stabilize, Dai said, as European governments' rescue package for Greece eases concerns among investors. The fund will be "very careful" with overseas investments, he told reporters in Beijing on May 21, when asked if the European debt crisis will slow its overseas investments.
The US dollar will remain dominant in the global currency system, although it may weaken over the longer term, Dai said. Chinese mainland's foreign exchange reserves face losses due to the depreciation of the dollar, which likely accounts for more than 60 percent of the mainland's foreign exchange assets, he said in a June 10 speech in Tianjin, according to a transcript on his fund's website posted two days later.
The mainland pension fund's overseas portfolio accounted for about 7 percent of its total investments as of the end of 2009, which compares to a 20 percent maximum it's allowed to spend abroad, Dai said.
The fund's realized investment gains surged 83 percent last year to 42.7 billion yuan, Xinhua reported in January, as China's benchmark Shanghai Composite Index jumped 80 percent. It has committed a combined 7.4 billion yuan of investments in five private-equity funds, Dai told a forum in Beijing May 21.
Total assets of the fund may expand to 2 trillion yuan in 2015, Dai said Thursday.