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SCMP Reporter

The mainland pension fund has chosen five funds to invest in this year, and the amount may involve  up to  7 billion yuan (HK$7.96 billion), the  fund's head said yesterday. 
Dai Xianglong, the chairman of the National Council for Social Security Fund, said on the sidelines of the Boao Forum in Hainan that the US$130 billion pension fund it manages as well as the nation's US$300 billion sovereign fund managed by China Investment Corp were eager to find overseas investment targets.
'I've said so to many bankers. Try to find us good overseas investment targets as soon as possible,' Dai said. 
 Managing the investments through funds was a realistic solution, he said, adding that the pension fund had chosen five funds to invest in and the investment amount would be between 6 billion yuan and 7 billion yuan.  Dai did not identify the funds.  
The pension fund was set up in 2000 with state  capital and dividends from listed state firms. It is allowed to invest up to 20 per cent in foreign assets. The present proportion invested in foreign assets is  just 6.7 per cent. 
'Our foreign exchange holdings are making 3 to 4 per cent annual returns on foreign treasuries, while foreigners could achieve a 15 per cent investment reward easily by investing directly in China,' Dai said. 
The fund recorded a return on investment of 16.1 per cent last year. Its average annual return over its nine-year history is 9.75 per cent.
The country's foreign exchange reserves, by far the largest in the world, reached US$2.4 trillion at the end of last year, up US$453 billion from 2008. The  reserves pose a big challenge for value preservation and incremental earnings.
'I expect the trade surplus to decrease sharply from last year. It is not a bad thing. We don't want much more foreign exchange,' Dai said. 
Both the pension fund and CIC would increase outbound investment this year, he said.  
The pension fund will seek to be  an investor  that holds small stakes in foreign companies and shares bonuses rather than seeking control of any company.
It is also considering participating in fund-raising plans by various domestic banks. Many banks have announced plans to raise billions of yuan to replenish capital after the lending spree last year. Agricultural Bank of China is preparing an initial public offering. 
Dai said any participation would depend on valuations and what stake the fund would hold.
Zheng Xinli,  a vice-chairman of the China Centre for International Economic Exchanges, said at the forum that the mainland and other Asian countries should use their foreign reserves to set up three Asian banks to invest in the region's infrastructure and agricultural development, which would be better than bearing the US dollar depreciation risk as many countries hold US treasury bonds as their main assets in foreign reserves.
On the prowl
The national pension fund is looking for good investment targets 
The amount of funds the National Council for Social Security Fund has under its management, in US$: $130b
In the nine years since it was set up, the pension fund has recorded an average investment return of: 9.75%



Mainland pension fund earmarks 7b yuan for five investment targets