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HONG KONG (Yonhap News) ― Korea’s state-run pension fund is seeking to invest as much as $300 million in Chinese stock markets as it looks to diversify assets worth nearly $300 billion, officials said.
The National Pension Service said earlier this week that it received the status of “qualified foreign institutional investor” from the China Securities Regulatory Commission.
The pension fund service expects to receive a quota ranging from $100 million to $300 million, equivalent to 0.1 percent or less of its total assets, from the Chinese authorities.
A foreign investor usually needs to wait for months to receive the quota from the Chinese State Administration of Foreign Exchange after it is granted a license to join the QFII program.
Shares in mainland China-based companies that trade on Chinese stock exchanges, such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange, are generally only available for purchase by mainland citizens.
Foreign investment in those shares, called A-shares, is only allowed through a tightly-regulated structure under the QFII system.
The latest approval came more than a year after the NPS applied for the status in December 2010.
The NPS is the first among Korea’s four pension entities to receive the QFII status. The other three are the Government Employees Pension Service, Korean Teachers Pension Fund and the Military Mutual Aid Association.
As South Korea’s largest institutional investor, the NPS holds about 346 trillion won ($297.5 billion) worth of assets under its management. The asset holdings are expected to reach 500 trillion won within four to five years.
The pension fund operator has been seeking to diversify its investment destinations in order to reduce the overall risks and increase profitability.
It currently invests 44.6 trillion won in overseas markets, or 12.9 percent of its total assets. The NPS plans to increase the ratio to 20 percent by 2016.
The National Pension Service said earlier this week that it received the status of “qualified foreign institutional investor” from the China Securities Regulatory Commission.
The pension fund service expects to receive a quota ranging from $100 million to $300 million, equivalent to 0.1 percent or less of its total assets, from the Chinese authorities.
A foreign investor usually needs to wait for months to receive the quota from the Chinese State Administration of Foreign Exchange after it is granted a license to join the QFII program.
Shares in mainland China-based companies that trade on Chinese stock exchanges, such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange, are generally only available for purchase by mainland citizens.
Foreign investment in those shares, called A-shares, is only allowed through a tightly-regulated structure under the QFII system.
The latest approval came more than a year after the NPS applied for the status in December 2010.
The NPS is the first among Korea’s four pension entities to receive the QFII status. The other three are the Government Employees Pension Service, Korean Teachers Pension Fund and the Military Mutual Aid Association.
As South Korea’s largest institutional investor, the NPS holds about 346 trillion won ($297.5 billion) worth of assets under its management. The asset holdings are expected to reach 500 trillion won within four to five years.
The pension fund operator has been seeking to diversify its investment destinations in order to reduce the overall risks and increase profitability.
It currently invests 44.6 trillion won in overseas markets, or 12.9 percent of its total assets. The NPS plans to increase the ratio to 20 percent by 2016.
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Articles by Korea Herald
