The central government will select five firms from 10 short-listed domestic fund management companies to manage the pension funds, which are managed by the Social Security Fund Council, on the securities markets at a closed-door meeting which starts in Beijing today. The 10 firms were chosen from China's 18 fund management companies.

"Five companies will be eventually picked from 10 candidates," said Cheng Dinghua of Everbright Securities Co. "Companies that have strong research teams and a risk-averse investment style will be the favorites and the five companies meet these requirements."

The other three top candidates, according to Cheng, are Beijing-based China Asset Management, Changsheng Fund Management and Shenzhen-based Southern Fund Management.

"I think the five companies are quite likely to be appointed," said analyst Chen Jinquan of Ping An Insurance Co.

Meanwhile the fund management companies contacted by Shanghai Daily yesterday were tight-lipped, refusing to discuss their prospects.

"We do not want to see our relationship with the social security fund to be hyped up by the media," said Li Shilin, spokesman for China Asset Management. "But it always tops our agenda to develop more businesses with institutional investors, such as the pension fund."

Lu Jin, a spokeswoman for Shenzhen-based China Southern Fund Management Co., would only say her firm is ready to take questions from the council.

In December last year, the minis-tries of finance and civil affairs jointly agreed that up to 40 percent of the pension funds can be in-vested in the yuan-denominated Class A-share market and the rest to be used to buy government treasury bonds, or to be deposited in banks.

The selected fund management companies will be allowed to set up a special account, which will be separated from the closed-end and open-end fund accounts under their management, for the social security funds.

"So far as I know, a large pro-portion will be used to buy bonds rather (than) A shares for safety," said a researcher close to the council.

The other five candidates are Penghua Fund Management Co., Fullgoal Fund Management Co., Harvest Fund Management Co., Boshi Fund Management Co. and Dacheng Fund Management Co.

(Shanghai Daily November 21, 2002)