9. Pension funds ready for mega equity investments

In June, the Ministry of Human Resources and Social Security gave approval to pension funds to invest in equity markets starting this year.

This move is expected to channel 600 billion yuan gradually into China's equity market. In the long run, about 2 trillion yuan, or 30 percent of the funds' net assets, will be directly or indirectly channeled into China's equity market.

Up to 600 billion yuan ($97 billion) could be channeled into China's struggling equity market after the Cabinet gave final approval on Dec 27 to allow pension funds access to the stock market.

According to the rules, pension funds will be pooled and transferred in accordance with a unified process, which may take time. Thus, the effects will not be immediate. For pension funds, the equity market is a new investment channel that may bring higher yields and for the equity market, the inflow may inject significant liquidity. This could prove to be good for large-cap blue-chip stocks, which are believed to be more stable and less risky.