China to allow pension fund investment in stocks

China to allow pension fund investment in stocks 24 Aug 2015 12:00 AM China will allow its huge state pension fund to invest in domestic stocks in the wake of a massive market sell-off, it was announced Sunday. The AFP reports that the fund will be able to invest up to 30 per cent of its net assets in equities, according to final guidelines from the State Council (cabinet) quoted by the official Xinhua news agency. The fund, to which workers must contribute, had 3.5 trillion yuan ($548bn) in net assets at the end of 2014. The move could allow the fund to invest billions of yuan into domestic equities after a stock market rout forced the government to take emergency support measures. Xinhua depicted the decision as an attempt to boost returns as China struggles to care for its increasing elderly population. But it acknowledged the recent decline in the nation’s stock markets. Shanghai shares closed down 4.27 per cent Friday, bringing losses for the week to more than 11 percent on worries over the flagging economy and fears of weaker government support for equities. Chinese shares have been highly volatile in recent months, plunging almost a third in a matter of weeks in June and early July, after having risen over 150 per cent in the preceding year. After the June collapse, Beijing intervened with a rescue package that included funding the state-backed China Securities Finance Corporation to buy stocks on behalf of the government.