Learn mandarin - Pension fund eyes investment abroad

BIZCHINA / Center

Pension fund eyes investment abroad

(Reuters)
Updated: 2007-03-11 10:14

China's National Social Security Fund plans to pour more of its assets
into overseas financial markets, its chairman Xiang Huaicheng said on
Saturday.

The fund, which has already said it will have invested $1.6 billion
abroad by the end of March, would step up its activities but Xiang did
not disclose details during an interview aired on Hong Kong-based Phoenix
Television.

Asked if the fund, which had assets of some $30 billion late last year,
planned to invest more cash overseas, Xiang replied: "I believe we will
definitely increase the levels. I cannot say when we will do this or talk
about the additional amounts which would be involved."

China's National Social Security Fund was established in August 2000 by
the central government as a back-up reserve fund, or "fund of last
resort", for the country's patchwork of badly underfunded provincial
pension schemes. In November, the fund awarded global investment mandates
to 10 foreign fund managers to plough more than $1 billion into overseas
stocks and bonds, paving the way for it to venture overseas for the first
time.

Last year, the fund earned a total of 19.5 billion yuan, marking a return
on its capital of 9.3 percent, up from 3.12 percent in 2005.

A large portion of its 2006 earnings had come from activity in the
country's then-buoyant stock markets, Xiang said.

Xiang had said previously that the fund aimed to invest at most 30
percent in stocks, around 55 percent in fixed income products and about
15 percent in direct equity stakes in industrial firms.

Xiang told Phoenix television that he did not think that the proportion
of the fund's investments which could be poured into equities should rise
as such parametres were an issue of financial safety.

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Chinese School - France wins deal for nuke plants

BIZCHINA / Overseas Investment

France wins deal for nuke plants

By Wang Ying (Shanghai Daily)
Updated: 2007-03-06 14:28

China will award a contract to build two nuclear reactors in its
southeast to France's Areva SA, a Chinese official said yesterday.

Related readings:
Areva may get nuclear contract
Areva deals with China on 2 nuclear reactors
Areva T&D to double capacity

The two sides are working on a final accord to build the reactors at
Yangjiang in Guangdong Province, Qian Jihui, a senior adviser at China
National Nuclear Corp, the nation's top nuclear reactor builder, said in
Beijing. The contract was originally awarded to Toshiba Corp's
Westinghouse Electric Co, which will get an agreement for two other
reactors in Shandong.

China needs to add two reactors a year to meet a 2020 target of getting
four percent of its power from nuclear energy from about 2.3 percent now.
Areva and Westinghouse are competing to build as many as 26 more reactors
by 2020 as China turns to atomic energy to cut pollution and reliance on
oil.

"Awarding the contracts to two companies will give China more room in
later negotiations," said Yan Shi, a Shanghai-based analyst with Core
Pacific Yamaichi International Ltd.

Westinghouse originally won a US$5.3 billion agreement on December 16 to
build reactors at Yangjiang and Sanmen, after outbidding Areva and
Russia's AtomStroyExport following almost two years of negotiation and
lobbying. France's President Jacques Chirac promoted Areva's bid when he
met his Chinese counterpart, Hu Jintao, during a visit to Beijing in
October.

The parties will sign a final agreement "very soon," Qian told reporters,
without giving specific reasons for the decision to award the contract to
build the reactors in Guangdong Province to Areva instead of Westinghouse.

China plans to import uranium from Australia, Canada, South Africa and
Kazakhstan to fuel its expanding nuclear power capacity, Qian said. China
has nine reactors operating in Zhejiang and Guangdong provinces. Six are
under construction in Jiangsu in the east and in Guangdong. These
projects have a combined capacity of about 12,000 megawatts. China plans
to use Russian technology for two reactors at the Tianwan Nuclear Plant
in Jiangsu, Qian said. "China and Russia have a close relationship," he
said. "Awarding nuclear reactors could be a deal boosted by political
ties."

Paris-based Areva may build the Yangjiang reactors, among four originally
earmarked for Westinghouse, which will instead get a contract for two
reactors at Haiyang in Shandong Province, according to Bloomberg News.

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Chinese School

Learn Chinese online - HK-mainland market link worth effort

BIZCHINA / News

HK-mainland market link worth effort

By Hong Liang (China Daily)
Updated: 2007-02-27 10:23

The apparent dismissal of proposals to link the Hong Kong and mainland
stock markets as infeasible by Hong Kong Exchanges and Clearing Chief
Executive Paul Chow Man-yiu might seem most discouraging to the
government officials and economists who have shown great enthusiasm and
support for the idea.

His remarks were seen in Hong Kong as a refutation to a suggestion made
earlier by Fang Xinghai, deputy director of the Shanghai government's
financial services office. Fang recommended that a platform be created to
trade shares in the 38 companies dually listed in Hong Kong and Shanghai.

But it is wrong to see Mr Chow's comments as entirely negative. He was
quoted by Hong Kong media as saying that unless the yuan is fully
convertible, stocks in the two places cannot be freely circulated.
However, he added that expanding the existing QDII, or qualified domestic
institutional investors, and QFII, qualified foreign institutional
investors, mechanisms could be the foundation for such a link.

That was more or less what Hong Kong Monetary Authority chief Joseph Yam
has been saying all along. In one of his recent essays, Mr Yam, a strong
proponent of the link, wrote that a merger of the two stock markets isn't
an option in the present regulatory environment.

Acknowledging the hurdle posed by the restrictions on currency
convertibility, particularly in the capital account, Mr Yam contends that
it is still feasible to establish a channel that "would have the effect
of pooling the various financial markets of the two jurisdictions,
providing much greater liquidity and much more efficient price discovery".

As an illustration of how such a channel could be built, Mr Yam cited the
use of the QDII and QFII schemes. He also noted the possibility of
creating derivative instruments for trading in both markets with an
arbitrage mechanism to equalize prices.

It is obvious that efforts to establish any form of link between the two
markets must be initiated by the respective government authorities
because it would invariably involve a host of regulatory issues. It is
not surprising for people in the private sector to remain skeptical
because their money could eventually be put at risk.

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