China’s pension funds gain access to struggling stock market

BEIJING - China’s pension funds, which hold up to RMB600 billion (US$97 billion) and account for nearly 90% of the country’s social security fund pool, have been approved by China’s Cabinet to have access to the struggling stock market. According to the rules published by the State Council, the funds will be able to invest up to 30% of their net assets in stocks, equity funds and balanced funds.

A draft rule was published on June 30, and the Ministry of Human Resources and Social Security said in late July that it had found a majority of the public in support of the proposals. After shares in mainland China’s stock market dropped by nearly 12% - the worst weekly performance in June – the rule was published on Sunday (August 23).

According to the Ministry, China’s pension funds had net assets of RMB3.5 trillion by the end of 2014. Ministry spokesman Li Zhong said more than RMB2 trillion can be used for investments, which means that essentially RMB 600 billion could potentially be invested in the stock market. www.webershandwick.cb (ATI).