Low ROE could hurt China's funding of its huge pensions deficit
China''s listed companies suffer from low ROE. Unless it improves, the country''s shift from a pay-as-you-go system to a funded system could be compromised.
China has a problem. It has massive pension liabilities, estimated at $800
billion, and listed state owned enterprises which show dismal return on equity.
The interim results of Chinese listed companies showed ROE of just 4.1% this
year, down from 5% at the same point last year, according to research from emerging
markets investment bank CLSA.
"To provide for our liabilities, we would typically look at an investment
yield of around 10% per year," commented Ron Ots…
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