Top Biz News

Pension fund eyes US$1.6b investment abroad

(Shenzhen Daily/Agencies)
Updated: 2007-01-28 13:45

The National Social Security Fund plans to invest another US$750 million into overseas financial markets in the first quarter of 2007, chairman Xiang Huaicheng said Wednesday.

He told reporters the fund had invested US$850 million abroad by the end of 2006 and would have invested a total US$1.6 billion by the end of March.

"The government has started to allow us to invest more on the overseas market as China has abundant foreign exchange reserves," Xiang said.

He added the government had told the fund it could invest up to 20 percent of its total assets abroad. It had assets of around US$35 billion as of the middle of last year.

Though the fund had yet to map out any global investment strategy for the whole of 2007, it would aim for diversified, long-term investments overseas with a focus on controlling risks.

To invest abroad, the fund was able to draw on its own foreign exchange assets or buy the currency it needed with its stash of yuan, Xiang said.

The returns on the fund's overseas investments to date had reached around 2.02 percent, he said.

The fund only began investing in overseas markets after awarding 10 foreign fund managers hotly contested mandates to manage its money abroad in late November.

Fund managers were asked last year for their proposals on how to invest US$800 million in shares and US$300 million in bonds and cash.

At an earlier news conference, Xiang only said that the mandates totalled more than US$1 billion.

Regarding the fund's overall performance, Xiang said that it had earned a total of 19.5 billion yuan (US$2.5 billion) in 2006, marking a return on its capital of 9.3 percent, up from 3.12 percent in 2005.

The fund also had unrealized gains of 42.4 billion yuan from its equity investments, he said.