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China Pension Fund Says to Keep Stock Holdings

China's national pension fund will not make significant changes to its investment portfolio despite suffering big losses in equities, the fund's chairman, Dai Xianglong said in comments published on Monday.

China, Chinese Flag
CNBC.com
China, Chinese Flag

Dai's National Social Security Fund (NSSF) is a prominent institutional investor and his comments could be aimed at easing investor concerns about the stock market, which has fallen nearly 55 percent since hitting a record high last October.

"We will keep the percentage of our stock investment stable and increase investment in fixed-income products," Dai said in an interview with the People's Daily, the Communist party's mouthpiece.

Dai said the fund would stick to its asset-allocation plans and long-term investment approach. "When the stock market is at its low, our fund's role in stabilizing the market will be more visible," he said.

The fund had assets of 516.2 billion yuan ($76 billion) at the end of 2007, including 181.6 billion yuan worth of domestic and overseas equities entrusted to fund managers.

But that was before a 48 percent fall in the Shanghai Composite Stock Index in the first half of the year.

Dai said the NSSF's portfolio did not do as badly as the index. However, the losses were greater than the fund's income in the first six months. He did not provide any figures.

Dai, a former central bank governor, said the NSSF would continue to invest through fund managers rather than directly on its own account but planned to set up its own private equity funds.

The NSSF, a central-government safety net for China's patchwork of underfunded provincial pension schemes, has won approval to invest up to 10 percent of its assets in private equity.

The NSSF recently put 2 billion yuan in each of two domestic private equity funds being established by CDH Investments and Hony Capital.

It has also invested in some government-backed private equity funds, including the Bohai Industrial Investment Fund based in Tianjin, which Dai was instrumental in establishing when he was mayor of the northern port city.