China’s pension fund invests $1.6 billion in shares

China’s national pension fund has invested 10 billion yuan (€1.2 billion) into the country’s stock market, state media reported yesterday, as Beijing moves to boost support for flagging shares.

The National Council for Social Security Fund injected the funds last Friday, the Shanghai Securities News said, without citing sources.

Chinese shares surged more than two per cent that day after trading near 33-month lows in earlier sessions.

Shanghai’s main composite index has fallen more than 20 per cent since the beginning of the year amid concerns including a slowdown in the world’s number two economy as well as government tightening measures aimed at reining in inflation.

Yesterday’s report boosted the Shanghai Composite Index, which rose 0.25 per cent to 2,221.43 in afternoon trade as investors lay bets on the government taking further steps to lift the market.

In October a government investment arm increased its stakes in the country’s major lenders, which analysts said at the time was aimed at shoring up support for the market.

Dai Xianglong, the head of the social security fund, said China’s largely unmanaged pension funds should be investing in equities to get better returns, the China Daily said yesterday, without mentioning the recent fund injection.

“Nearly all the pension funds in the world invest in the stock market,” Dai was quoted as saying.

“I think it is OK to allocate part of the pension funds managed by local governments to buy stocks. This will help preserve and increase the value of pension funds.” A local fund manager told the Shanghai Securities News that the latest injection of funds suggested the government believed the market had nearly bottomed and there was “long-term value”.