Chinese Government Goes All-In On Equity Bull

This is it. The last major economy in the world has bet all its chips on the financial market.

On Saturday, the PBOC slashed interest rates and the RRR.

On Sunday, the national pension fund has been given permission to invest 2 trillion yuan in local government pensions.

Reuters: China to let NSSF manage $322 billion in local pension funds

China's cabinet has approved plans for the manager of the country's biggest pension fund to manage pension funds worth about 2 trillion yuan ($322 billion) for local authorities, two industry sources with direct knowledge of the matter said.

China is trying to strengthen its pension system to meet the huge demographic challenge of an already-shrinking working-age population as it looks to turn the economy into one driven by consumption and services rather than investment and exports.

The move for the National Social Security Fund (NSSF) to manage and invest more pension funds on behalf of provincial authorities could benefit the stock market, which has fallen 20 percent over the last two weeks.

Chinese coverage dubs it a foregone conclusion.

iFeng: 养老金投资股市或成定局 比例暂定不超3成

Economic Observer newspaper explained obtained from a source close to the experts at the Department who, in one department, the Ministry of Finance and other relevant departments, to the social security fund to invest in stocks, there have been two distinct voices, but the current development pension to invest in stocks probably a foregone conclusion, and further information is displayed, limited to invest in stocks is the highest proportion of not more than 30%.

People close to the above Department expert said, adding that China's pension including basic pension and supplementary pension, as of the end of 2014, China's basic pension accumulated surplus of 3.5 trillion yuan, supplementary pension accumulation fund is more than 7600 billion yuan, according to 30 % share of investment in the stock market accounting, the stock market is expected to invest nearly 1.3 trillion yuan pension.

On Sunday, it was also announced that internal audits at brokerages are complete. This isn't a big change, but it lessens the regulatory scrutiny on Chinese brokers. The timing of the investigation may matter: it began in mid-June as the market peaked. Tightening of margin rules also emerged about the same time.

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