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NCSSF adds new overseas partners

By Wang Fei’er (Global Times)

08:34, July 20, 2012

China's National Council for Social Security Fund (NCSSF), the manager of the country's mammoth pension fund, has selected 12 new global investment firms to manage its assets in overseas capital markets in a bid to ease financial pressures on the domestic social security system, the NCSSF announced late Wednesday.

This group, combined with overseas investors selected in 2006 and 2008, brings the total number of global firms managing China's social security fund to 34.

While their numbers may be growing, strict limits on capital outflow and a near-zero tolerance for risk have historically allowed overseas investment groups to manage only a fraction of China's pension money, Cai Junyi, chief investment consultant from Shanghai Securities, told the Global Times.

As of the end of 2011, only some 10 percent of China's 868.82 billion yuan ($136.31 billion) social security fund was invested overseas, mostly in low-yield bank bills, equities and bond vehicles vetted by regulators, according to data from the NCSSF.

Limited access to a small number of investment options overseas is not the only problem facing the nation's social security fund, Cai went on the mention. Low bank savings rates and a bearish stock market at home have also weakened investment returns, Cai explained.

The NCSSF earned only 0.84 percent on its investments last year, as the Xinhua News Agency reported Thursday.

These weak figures have undoubtedly stirred the government to improve the funds' investment earnings and are probably behind this latest list of investors, said Qiu Yanying, chief analyst with Beijing-based Tianxiang (TX) Investment Consulting.

The high asset volume these investors have under their management as well as their proven expertise in the global market points to regulators' eagerness to enlarge investment efficiency for China's struggling pension fund, said Qiu.

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