Gov't allows public funds to invest in stocks

The government has decided to allow stock investment in principle to national pension fund and other public funds. And investment managers of these funds may not be responsible for the losses from investment in stocks if they did in accordance with the ordinances and internal guideline.

The Ministry of Finance and Economy worked out a plan to resolve the obstacles faced by public funds for investment in stocks and announced it on Sunday.

First of all, the ministry revised the basic law on fund management to allow their investment in stocks. Also, the internal regulations concerning investment in stock will be relaxed to the maximum degree. The ministry plans to set up an exclusive fund that will be commissioned to investment trust companies or asset management companies for their stock investment.

A ministry official said that public funds such as National Pension Fund and Public Servants' Pension Fund will invest in the exclusive fund. Initially, the fund will be capitalized at about 1.5 trillion won. But, the amount of fund will be expanded on a gradual basis. Currently, of the nation's 75 public funds with 150 trillion won in total assets, only National Pension Fund and two others are investing 4% of their assets in stocks.

Kwon Soon-Hwal shkwon@donga.com