Long horizons

1 December 2016 By Rachel Morarjee

China is moving to invest $290 billion worth of public pension funds in financial markets including stocks. That won’t spark a rally, but will increase healthy institutional ownership. Given shortfalls, long-term returns from volatile Chinese stocks are preferable to deposits.

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Pensions

Regions

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China has named four banks as custodians of its pension insurance fund, in a step towards investing up to $290 billion of pension funds into the country's financial markets, out of a reserve of $579 billion held at the end of 2015.

Previously pensions were restricted to buying lower-yielding bank deposits and treasuries.

The banks are Industrial and Commercial Bank of China, Bank of China, Bank of Communications and China Merchants Bank, the National Council for Social Security Fund said on its website on Nov. 29.

State-owned newspaper the Securities Daily said investment of the first tranche of $29 to $44 billion could be invested by early next year. It quoted an academic who expected a tenth of that to be invested in stocks while the rest would go to other asset classes.

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Long horizons

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