China's national pension fund said yesterday it's "unaware" of a government plan to give it shares from initial public offers, using the fund as a repository for state shares and a cap for limiting the country's soaring stock market.
China's National Council for Social Security Fund will be given 10 percent of all state companies' IPOs starting from the end of 2007, China Securities Journal said yesterday, citing unidentified sources. The Beijing-based pension "hasn't heard of and is unaware" of the plan, spokeswoman Jin Yingzi told Bloomberg News yesterday by telephone.
Owning these shares can help the 460-billion-yuan (US$61 billion) fund, set up in 2000 to earn money for the nation's retirees, boost returns in a stock market that's almost tripled in value this year.
The plan can also cap gains in the world's most expensive primary stock index, as a sale by the fund will flood the market with shares and drag prices down, analysts said.
"It's a way to boost the pension's returns because IPOs often trade at premiums to their offer prices," said Fan Dizhao, who helps manage the equivalent of US$1.8 billion at Guotai Asset Management Co in Shanghai. "It's also the government's intention to cool the market by adding to the supply of stocks."
The Chinese government in June 2001 issued rules for selling the shares of state-owned companies. Under the plan, the Ministry of Finance allocates proceeds from the stock sales to the pension fund to boost its capital.
(Shanghai Daily September 27, 2007)