China Social Security Fund Awarded State-owned Equity Support Short-term Relianc

China recently announced the top-level design plan to enrich state-owned social security funds with state-owned capital. The domestic social security funds will usher in the support of several trillion yuan in assets and pressure on payment will be eased in the future.

The reduction of state-owned shares has traditionally been a high-voltage line in the A-share market. Fortunately, the plan fully considered the national conditions and emphasized that dividend should be the main source of social security revenue, causing the stock market pressure to drop sharply. Analysts pointed out that this policy guidance will guide the domestic listed companies to improve the dividend mechanism, state-owned blue chip dividend into practice; the same time as the domestic social security system is more perfect, will promote A-share institutional features more pronounced.

"Whether it is national social security or local social security, will be long-term investment, stock market stability will be further strengthened, retail and speculative capital may be more and more marginalized in the future." Galaxy Securities senior analyst Ren Chengde said.

China's State Council recently issued a plan to transfer some state-owned capital to fully implement the social security fund, including the transfer of state-owned and state-controlled large and medium-sized state-owned and state-owned enterprises and financial institutions from central and local governments to the scope of transfer. The transfer ratio is 10% of the state-owned equity. In the implementation of the program, it will not and will not allow a lot of state-owned capital realized.

Enriching social security funds with state-owned assets will inevitably be implicated in the stock market. In 2001, a policy of reducing state-owned shares to raise social security funds immediately triggered a wave of A-shares in the bear market and missed the benchmark Shanghai Composite Index in a year. SSEC dropped by 40%, and the State Council can only make it clear in 2002 that it no longer applies the reduction provisions in the domestic stock market . In 2009, some state-owned shares of listed public companies in China introduced the provisions of enriching social security, and only adopted the form of "transfer", not mentioning the reduction of cash holdings.