Pension fund may win IPO allotments
China’s pension fund is set to receive 10% of the stock of all state-owned companies going public from the end of 2007, the China Securities Journal reported, citing unidentified sources. The fund currently receives a slice of proceeds from share offerings rather than an actual share allotment, which means it misses out on any trading gains. However, National Council for Social Security Fund spokeswoman Jin Yingzi told Bloomberg the fund was unaware of the plan. The proposal is designed to help boost the US$61.25 billion (RMB460 billion) pension fund’s earnings through gains on the domestic stock market, which has almost tripled in value this year. “It’s a way to boost the pension fund’s returns because IPOs often trade at premiums to their offer prices,” said Fan Dizhao, who helps manage US$1.8 billion at Guotai Asset Management Co in Shanghai. Meanwhile, the fund announced this week it has seen a return of 12% on its overseas investments since it started investing abroad last year. The social security fund was established in August 2000.