The central government-level “task force for augmenting the efficacy of the operation of public funds” resolved yesterday (Nov. 21) requiring the labor pension fund and the labor insurance fund not to clear the positions for small-cap stocks or F stocks (stocks of Taiwanese-invested firms in mainland China) by a deadline, so as avoid affecting the stability of the stock market.
Meanwhile, the task force, which is formed by the Executive Yuan (the Cabinet) and the Examination Yuan jointly, also passed a resolution requiring public funds to base their investments on the performance of individual stocks, rather than the distinction of domestic or foreign firms or the scale of their capitals.
Officials in charge of the labor pension fund and labor insurance fund expressed that they will comply with the instruction of the task force.
The task force passed the resolutions during a meeting attended by representatives of the Central Bank of China, the Ministry of Civil Service, the Ministry of Finance, the Council of Labor Affairs, and the Ministry of Transportation and Communications.
In addition, the task force decided not to integrate the public funds into a single fund, such as a sovereign fund, at current stage.
An official in charge stressed that public funds adhere to the principle of long-term investment, rather than seeking short-term performance or absolute returns. To avoid recurrence of scandal of fund managers in handling investments for public funds, the task force instructed government agencies in charge to step up cooperation with the Financial Supervisory Commission in strengthening the mechanism for information transmission. The FSC will also require fund managers to improve self-discipline and internal-control mechanism to resume the confidence of investors.
In order to enhance the investment performance of public funds in the short term, the task force will study ways for improving talent recruitment and adjusting compensations for the staffers of public funds.
For the sake of cultivating indigenous financial industries and financial talent, the task force will have the FSC continue pushing the development of “Taiwan-based wealth management platform.”
