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Pension fund eyes more investment abroad

(Reuters)
Updated: 2007-03-11 10:14

China's National Social Security Fund plans to pour more of its assets into overseas financial markets, its chairman Xiang Huaicheng said on Saturday.

The fund, which has already said it will have invested $1.6 billion abroad by the end of March, would step up its activities but Xiang did not disclose details during an interview aired onHong Kong-based Phoenix Television.

Asked if the fund, which had assets of some $30 billion late last year, planned to invest more cash overseas, Xiang replied: "I believe we will definitely increase the levels. I cannot say when we will do this or talk about the additional amounts which would be involved."

China's National Social Security Fund was established in August 2000 by the central government as a back-up reserve fund, or "fund of last resort", for the country's patchwork of badly underfunded provincial pension schemes. In November, the fund awarded global investment mandates to 10 foreign fund managers to plough more than $1 billion into overseas stocks and bonds, paving the way for it to venture overseas for the first time.

Last year, the fund earned a total of 19.5 billion yuan, marking a return on its capital of 9.3 percent, up from 3.12 percent in 2005.

A large portion of its 2006 earnings had come from activity in the country's then-buoyant stock markets, Xiang said.

Xiang had said previously that the fund aimed to invest at most 30 percent in stocks, around 55 percent in fixed income products and about 15 percent in direct equity stakes in industrial firms.

Xiang told Phoenix television that he did not think that the proportion of the fund's investments which could be poured into equities should rise as such parametres were an issue of financial safety.