Saga of Financial Markets


Last updateSat, 29 Jul 2017 12am

Back You are here: Home Market Market Update News Korea Largest Fund seeking to invest more in China

Korea Largest Fund seeking to invest more in China

South Korea’s National Pension Service, with AUM $316 billion, largest Korea Fund, plans to seek approval to buy more yuan-denominated Chinese stocks after using up the initial quota of $100 million it received in March.  Chairman Jun Kwang Woo said the it plan to use that allotment by September. 

The fund also aims to expand investments to Chinese bonds and so-called alternative investments later, he said, without being more specific.  No details of how much quota the fund plans to apply.

Foreign institutions must get a license as a qualified foreign institutional investor from the China Securities Regulatory Commission first before they obtain quota from the State Administration of Foreign Exchange to buy yuan-denominated stocks and bonds.

In March 2012, the Bank of Korea, the nation’s central bank, received permission to invest $300 million in China, while Korea Investment Corp., the sovereign wealth fund, was granted a quota of $200 million.

The benchmark Shanghai Composite Index has fallen 61 % from its October 2007 record and traded for 12.7 times reported earnings as of yesterday, or 61% below the average level of 32.4 since 1997.

National Pension fund was set up in 1988 to manage pensions for private- sector employees and the self-employed. It is overseen by the nation’s Ministry of Health and Welfare. It forecasts its assets to increase to 565 trillion won ($490 billion) by 2016, according to a government statement on 20110603. The fund is seeking to boost overseas investments to at least 20% by 2016, from about 15% in March, to diversify its assets. National Pension had 64.5% of assets in domestic bonds and 17.8% in local stocks as of end of 2011.

National Pension plans to focus more on Asian markets, where economic growth is likely to outpace the rest of the world, Jun said. It aims to open an office in a “key location” in Asia, adding to one in New York and another to open in London next month.

Reference:  Bloomberg, Saeromi Shin, 20120515, “Largest Korea Fund to Seek More Investment Quota in China”