One of the four government funds authorized NT$15 billion of its assets to be managed by private fund management companies as of today. The other three government funds are soon likely to follow suit.
The Civil Servant Pension Fund (
The Civil Servant Pension Fund manages pensions for 600,000 civil servants, including military personnel, civil servants and public school teachers. With total assets of NT$186 billion, it is the smallest of the four funds. Yesterday's move allocates around 8 percent of the fund's assets to private fund management companies.
The discretionary account business was deregulated last July based on an amendment to the Securities Exchange Law.
Last month, the management committee of the Civil Servant Pension Fund completed the selection procedure for qualified outside fund managers. The Civil Servant Fund enlisted First Commercial Bank (
Nine companies have been authorized by the government to manage the fund's capital for two years, and there is no requirement on the percentage of shareholding that fund companies have to maintain within one year. However, the agreement does state that the fund would like to have a 12 percent annual return on fund money, or at least it should outperform the annual return of the TAIEX.
Minister of Finance Yen Chin-chang (
Between 30 to 50 percent of the NT$15 billion is likely to be invested in local shares in the early stage. It means between NT$4.5 to NT$7.5 billion of money could be brought into the local stock market in the near term. Since the performance of the stock market has been poor recently, the new money could provide a boost to sagging shares.
"The four government funds are going to authorize a total of NT$60 billion to NT$70 billion to private fund companies by the end of year. This should help the local stock market," said Hsu Li-ching (
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