Chinese government officials on Friday said reforms approved earlier this month allowing state pension funds to invest a portion of their investment portfolios in risk assets for the first time could affect roughly 2 trillion renminbi ($314 billion) in pension assets.
Under the expanded investment rules, allocations to domestic stocks are limited to 30% of a state pension fund's total assets.
Roughly 2 trillion renminbi of the 3.5 trillion renminbi in accumulated surplus pension funds could be affected under the expanded investment guidelines, You Jun, vice minister of China's Ministry of Human Resources and Social Security, said at a news conference in Beijing on Friday.
The government will work to hammer out all of the supporting policies needed to move forward with the expanded investment framework “as soon as possible,” said Vice Finance Minister Yu Weiping, in a transcript of the news conference on the government's official website.
Against the backdrop of a vicious bear market that began mid-June, erasing a rally that had lifted the Shanghai composite index by roughly 60% this year, government officials insisted the new rules weren't aimed at supporting the market.
Mr. You said striving to find an appropriate mix of safe and risky assets was in line with the maxim of not putting “all eggs in one basket,” and a 30% limit on equity assets would allow for effective diversification.
In trading Friday, Shanghai's composite index racked up a second session in a row of strong gains, jumping 4.8% to end at 3,232.35. Even so, after plummeting earlier in the week, the index still ended the week down 7.9%.