No timetable to invest welfare fund overseas

A senior official of China's US$20.5 billion national welfare fund said Wednesday there was no timetable right now on when the Central Government would allow it to invest in overseas financial markets.

"I have no timetable yet but I¡¯m an optimistic person," said Xiang Huaicheng, chairman of China¡¯s National Council for Social Security. ¡°The Chinese authorities are very supportive. It¡¯s just a matter of procedural issues."

Though the fund gained approval to invest in Hong Kong and other overseas financial markets 10 months ago, investors are still waiting for the Central Government to finalize the regulations.

"The principal rule of thumb is safety and avoiding losses," Xiang told reporters. Xiang said the size of the welfare fund was about 170 billion yuan (US$20.53 billion), of which between US$500 million and US$1 billion had been earmarked for overseas investment.

"Investing overseas is a way of diversifying risk," he said. "Given that the amount expected to be allocated overseas is small compared to the total fund size, the risk is little."

Xiang said Hong Kong would be the "first place of choice" for the fund¡¯s offshore investments.

"Hong Kong is an international financial hub, with an established legal system, financial intermediary institutions, foreign institutions as well as professional management talents," he said.

Xiang estimated that the fund made a profit of 4 billion yuan last year. "I expect the pension fund in total will make a profit but I can't guarantee that each individual investment will make a profit."

At present, the Central Government allows the pension fund to invest only in China's domestic financial markets.

The fund' overseas investment plan is viewed as a pilot scheme for the eventual rollout of China's keenly awaited qualified domestic institutional investor (QDII) program, which will enable local financial institutions to invest abroad.

Analysts said the fund, set up in 2002 to manage a grossly under-funded pensions system that has been seeking higher returns under the leadership of Xiang, could start investing overseas this year.

Source: Shenzhen Daily-Agencies