China’s National Council for Social Security Fund last week announced the selection of 21 local managers to oversee a first tranche of provincial pension fund assets being consolidated under the 1.91 trillion renminbi ($276 billion) National Social Security Fund’s umbrella to take advantage of the fund’s relatively sophisticated investment management capabilities.
Unlike the NSSF’s funds, a portion of which can be invested overseas, the investment of China’s more than $500 billion in provincial pension fund assets is restricted at present to local stocks, bonds and money market instruments.
In a research note, Z-Ben Advisors, a Shanghai-based consulting firm focused on Chinese financial markets, cited a local press report pegging the combined allocations for that first tranche of mandates at $58 billion.
Seven of the 21 mandate winners are joint ventures between local and foreign money management firms.
A spokesman for one of the joint ventures, Beijing-based China Life Pension Co., which Sydney-based AMP took a 19.9% stake in two years ago, called the first round of mandates a “significant milestone” in bringing China’s big pot of provincial pension assets into a broader “market-oriented, professionally managed basic pension fund scheme.”
The other joint ventures receiving mandates were:
- Fullgoal Fund Management Co. (28% owned by BMO Global Asset Management);
- ICBC Credit Suisse Asset Management Co. (20% owned by Credit Suisse);
- HFT Investment Management Co. (49% owned by BNP Paribas Investment Partners);
- China Asset Management Co. (10% owned by Power Corp. of Canada);
- Harvest Fund Management Co. (30% owned by Deutsche Asset Management (Asia)); and
- Penghua Fund Management Co. (49% owned by Eurizon Capital SGR).
The remaining 14 mandate winners included 8 fund management companies: Bosera Fund Management Co., Dacheng Fund Management Co., GF Fund Management Co., China Universal Fund Management Co., Southern Fund Management Co., E Fund Management Co., Yinhua Fund Management Co. and China Merchants Fund Management Co.. The remaining managers are broker-backed CITIC Securities and five insurer-backed asset managers: Changjiang Pension Insurance Co., Huatai Asset Management Co., Ping An Annuity, Taikang Asset Management Co. and PICC Asset Management Co..