In what appears to be a desperate bid to halt the decline of its capital markets, China has given its pension funds the green light to pump as much as 600 billion yuan ($97 billion) into the stock market.
Under the new rules, pension funds previously limited to bank deposits and treasuries will be able to invest up to 30% of their net assets in domestic stocks, equity funds and balanced funds.
These funds have a combined 2 trillion yuan in assets, meaning 600 billion yuan could in principle be channeled in the market. Other areas in China where they can invest include:
- convertible bonds
- money-market instruments,
- asset-backed securities
- index futures
- bond futures
- major infrastructure projects
The regulations – for which a draft was published on June 30, at the peak of the stock market rout – is one of a slew of measures brought in by Beijing to stanch the flow of capital from China bourses which saw shares slump nearly 12% last week.
The Chinese central bank also sought to boost exports earlier this month by devaluing the yuan. a move that has triggered a shock wave of competitive devaluation across Asia.
As of now though it looks as if China’s strategies to date have failed inspire with the CSI300 Index and the Shanghai Composite Index both down almost 9%. It looks like China is running out of ideas.
Photo: Japanexperterna.se