China will allow corporations to invest their pension funds in
the inter-bank bond market, according to a circular issued by the
central bank and the Ministry of Labor and Social Security
yesterday.
The move will help better preserve and increase the value of the
pension funds, which have accumulated a total of nearly 100 billion
yuan (US$12.9 billion), according to the circular.
With the new policy, the funds can be used to buy bonds not only
on the securities bourse but also on the inter-bank market.
Previously, the country's corporate pension funds could invest
in fixed deposits, treasury bonds and other bonds with no higher
than 50 percent of their net assets.
The move will also diversify investors in the inter-bank bond
market and boost its development, said the circular.
Latest figures from the central bank show bonds in renminbi
issued in January soared 237.8 percent year on year, including
772.2 billion yuan (US$99.7 billion)?worth of bonds issued in
the inter-bank market.
China has seen the inter-bank bond market grow rapidly in the
past decade and draw nearly 6,500 institutional investors. Last
year, 5.68 trillion yuan (US$733.8 billion)?worth of bonds
were issued in the inter-bank bond market, 35 percent up from
2005.
Sources with the central bank said more investors, including
housing provident funds, will be introduced into the market in the
future.
(Xinhua News Agency March 1, 2007）