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Pension funds may enter capital market (2)

By Huang Jingjing  (Global Times)

10:19, December 19, 2011

"I totally agree on efficiently using the funds to seek gains, otherwise they will depreciate in front of inflation and economic growth," Shen Shuguang, director of the Social Security Research Center at Sun Yat-sen University, told the Global Times, adding that such practice is common in other countries.

"Pension funds are one of the main forces in the stock market due to their sheer size. Many countries use a specific portion of the funds for investment purposes. China's stock market needs such a long-term investment source," Li Xunlei, an economic expert with the Guotai Junan Securities, told the Economy & Nation Weekly.

However, many argued that pouring pension funds into China's problematic capital market would put people's life savings at risk.

"The time for such a move has not yet arrived. The precondition for it should be a healthy stock market, but due to the lack of transparency and supervision, the current capital market is more like a machine for minor dignitaries to encircle money," Shen said.

The Shanghai Stock Exchange Composite Index slumped by 47.630 points or 2.14 percent last week, falling to 2,181 at close on Thursday, even lower than the 2,233 recorded on June 26, 2001.

Since taking office in late October, Guo has announced a series of high-profile policies to promote the healthy development of the stock market, including "zero tolerance" on insider dealing and securities- and futures-related crimes.

The Xinhua News Agency commented that the current effort to clear up the stock market is far from adequate.

"Problems found so far were only the tip of the iceberg. Investors' confidence was further shattered as corruption concerning private equity emerged after the launch of the Growth Enterprises Market. Investing pension funds into such a stock market is unlikely to bring about positive results," it said.

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