China wants its pension funds to buy stocks 'as soon as possible'

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China’s local pensions funds are looking to invest 2 trillion yuan ($US313 billion), including as much as 600 billion yuan in stocks, as soon as possible, said You Jun, the vice minister of human resources and social security on Friday.

Last weekend the government gave the green light for pension funds to invest in the nation’s stock market, something they were previously prohibited from doing.

According to Reuters up to 30% can be invested in stocks, equity funds and balanced funds. The remaining 1.4 trillion yuan can be invested in convertible bonds, money-market instruments, asset-backed securities, index futures and bond futures in China, as well as major infrastructure projects.

Speaking on the decision to allow pension funds to directly invest in stocks, Yu Weiping, China’s vice finance minister, told a media briefing on Friday that the government would give preferential tax treatment for local pension investment.

Adding his view, Xin Changxing, China’s vice labour minister, also stated that it was not the responsibility of pension funds to stabilise China’s stock market.

The news comes as Chinese stocks recover from their worst two-day rout since December 1996 earlier this week, something that along with earlier losses saw mainland indices lose more than 40% of their value since mid-June.

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