China's Pension Fund Taps 10 Global Managers

[HenryTo]

Chinese pension money starting to drip into global equity markets. Following is courtesy of the WSJ:
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China's Pension Fund
Taps 10 Global Managers
Huge Savings Pool to Flow
Into Foreign Stocks, Bonds;
U.S. Firms Are Part of Team
By ANDREW BATSON
November 30, 2006; Page C4

BEIJING -- China's pension fund chose the first group of money managers to handle its investments in overseas stocks and bonds, a major step in putting the nation's huge pool of savings to work in global capital markets.

The National Social Security Fund of China chose 10 foreign fund-management companies yesterday -- including T. Rowe Price Group Inc., UBS Global Asset Management and Pacific Investment Management Co., better known as Pimco -- to run the investments.

Officials have said the fund's initial investment outside mainland China will be the relatively small sum of $1 billion or so. That amount is likely to increase over time as new contributions continue to swell its holdings. Government rules for the fund limit such investments to 20% of its assets, which were about $29 billion as of the end of August.

The fund joins other Chinese investors that, over the past year or so, have been allowed to move some money offshore. China's insurance companies have $3.5 billion in such investments, though they still face restrictions on the use of their funds.

China's social-security fund started selecting its global fund managers six months ago, advised by Mercer Investment Consulting, a division of Marsh & McLennan Cos. The mandates for investments in global stocks -- those listed outside the U.S. -- went to AllianceBernstein LP, AXA Rosenberg Investment Management Ltd. and State Street Global Advisors. The social-security fund will invest in U.S. stocks through products tied to indexes, which will be run by T. Rowe Price and Janus Capital Group's Enhanced Investment Technologies LLC, known as Intech.

The fund gave a separate mandate for stocks listed in Hong Kong, where many Chinese companies trade. That went to Allianz Global Investors, Invesco Global Investment Funds Ltd. and UBS Global Asset Management. The fund's global bond investments will be handled by AllianceBernstein, BlackRock Inc. and Pimco, an Allianz unit. BlackRock also received a mandate for foreign-currency cash management.

The fund didn't disclose how its investments would be split among the different asset classes.

Write to Andrew Batson at andrew.batson@wsj.com