Caution in investing pension fund in stock market always pays back

An investor checks stock information on his mobile phone in front of an electronic board showing stock information at a brokerage house in Beijing, February 16, 2016.[Photo/Agencies]

THE MINISTRY OF HUMAN RESOURCES AND SOCIAL SECURITY said on Tuesday it will initiate investing some of the national pension fund in the stock market. This concerns people's livelihoods and social stability, so the management of the important fund must be prudent and be aware of the risks, commented Beijing News on Wednesday.

How to maintain the value of the 4-trillion-yuan ($615 billion) pension fund, which concerns people's livelihoods and social stability, has been a challenge to the central government for a long time. The government's prudence over investing the fund is understandable.

In the first quarter of last year, Japan lost nearly $100 billion of its pension investment fund. If the Chinese fund enters the stock market, the authorities must try their best to maintain its value, which will be a harsh test of their governance ability.

That China's stock market desperately needs long-term investors such as the pension fund highlights the potential risks involved in investing the fund in the market. The pension fund should by no means pay the bill for a weak stock market that is suffering the pains of the country's economic restructuring and slow introduction of financial reforms.

It is absurd that some people assume the government will issue some policies to bring down the stock market to prepare for the entry of the pension fund－30 percent of it at most at first－so as to prevent it from losing value. That move is against the purpose of the reform, and the pension fund is not a short-term speculator in the market.

But the pension fund will certainly enter the stock market at a comparatively low point－just like any other investor－and become an important power to maintain the stability of the Chinese stock market and improve its value in the long run.