China nudges mutual funds to offer pension products, stabilise markets

Chinese equities witness a downturn that has pushed benchmarks to two-year lows. — Reuters pic
Chinese equities witness a downturn that has pushed benchmarks to two-year lows. — Reuters pic

SHANGHAI, April 27 ― China’s securities regulator nudged mutual funds to develop fund products for private pensions and asked them to stabilise markets, as Chinese equities witness a downturn that has pushed benchmarks to two-year lows.

The move also comes against the backdrop of China launching its first private pension scheme last week, as it tackles economic challenges linked to an ageing population and looks to channel more long-term money into the stock market. 

Main benchmarks in China’s stock market have plunged more than 20 per cent this year, as the world’s second largest economy grapples with Covid-19 flare-ups, the Ukraine crisis, and a likely aggressive US monetary tightening.

The China Securities Regulatory Commission (CSRC) said in a statement late yesterday it would guide fund managers to adhere to the concept of “long-term investment” and “value investment” and play the roles of “stabiliser” and “ballast stone” in capital markets.

The CSRC, in its statement, said it would support the opening up of the country’s fund management industry and urged mutual funds to participate in the policymaking of pension fund investments.

To promote opening up of the industry, the CSRC said it will support foreign long-term institutional investors in establishing fund management companies or expand shareholding in China, and support domestic qualified fund management companies to “go global.”

It would also help some fund houses set up subsidiaries specialising in REITs (real estate investment trusts), equity investment, and pension financial services, and promote high-quality financial institutions like commercial banks, insurance institutions, and securities companies to set up fund firms. ― Reuters