Official hints at US$2b foray by mainland pension fund
The head of China's foreign-exchange regulator has indicated that about US$2 billion worth of pensioners' money held by China's National Social Security Fund may be allowed to make its way to the Hong Kong stock market.
Guo Shuqing, head of the State Administration of Foreign Exchange, said he did not see a problem giving the fund approval to invest about US$2 billion overseas.
That would equal the amount of money the fund had amassed over the past few years under a state share sell-down rule, requiring it to offload 10 per cent of H-share companies when they list. Recent sell-downs include China Telecom, China Petrochemical Corp and PICC Property and Casualty.
With tight capital controls in place, the state's portion of listing proceeds collected in Hong Kong has to be repatriated back to the mainland. But industry sources said the policy would change this year to allow the fund to park its state share sell-down proceeds in Hong Kong. However, the new rules will apply only to H-share offerings that take place this year.
The fund had been trying to lobby authorities to allow it to invest funds raised in previous years as well, the sources said.
The fund's investment debut overseas came before the looming launch this year of a qualified domestic institutional investor (QDII) scheme, which would allow mainlanders to invest in overseas capital markets, Mr Guo said.
China was taking steps to relax controls on its still-closed capital account to allow for easier fund flows in and out of the country and could open its capital account within five to six years.
The amount of money flowing out of the country through QDII should be equal to the funds flowing in through the qualified foreign institutional investor scheme.
