The National Council for Social Security Fund (NCSSF) is seeking
broader investment channels and financial resources to increase its
scale and yields.
"We are studying new investment tools for the social security
fund to expand investment," Xiang Huaicheng, chairman of the fund,
said yesterday at the International Finance Forum in Xianghe, Hebei
Province.
The new channels will feature sufficient risk controls, with
only a gradual increase in the funds invested in them, he said.
The four-year-old fund, which controls about 150 billion yuan
(US$18.1 billion) of strategic reserves in the social security
sector, started to make investments in the domestic capital market
last June via selected fund management companies.
Before that, its main investment tools were bank deposits and
treasury bonds.
Relevant departments are drafting detailed regulations for the
changes and Xiang said, "We will start overseas investment as soon
as possible after the system design is completed."
Apart from deposits, bonds, stocks and mutual funds, other new
potential investment tools for the foundation include industrial
investment funds and direct industrial investment, said
insiders.
The fund has already bought a stake in the Bank of
Communications as a strategic investor and is reported to be
interested in buying into a state-owned bank, though Xiang declined
to comment.
To expand the fund's scale it may also take over more state
assets, either from direct fiscal input or other income from the
state sector.
But to ensure a smooth landing for the fund, which sees security
as a top priority, China needs to first upgrade the quality of
listed firms and develop more financial derivatives, said Xiang.
The split equity structure of listed companies should also be
resolved.
By the end of September, NCSSF managed 148.9 billion yuan (US$18
billion) of assets. About 13.3 billion yuan (US$1.6 billion) of
them were used for stock investments and most of the rest were
assets with fixed returns.
(China Daily November 12, 2004)