* Selection clears way for investment of up to $290 bln
* Key step towards meeting target of end-2016 for investment
* First investment tranche seen around 200 bln to 300 bln yuan (Adds details of investments)
BEIJING, Nov 30 (Reuters) - China has selected four banks as custodians of its pension insurance fund, clearing another hurdle for the investment of funds of up to $290 billion in its financial markets.
The banks are Industrial and Commercial Bank of China , Bank of China , Bank of Communications and China Merchants Bank , the National Council for Social Security Fund said on its website on Tuesday.
State newspaper the Securities Daily called the move a key step in realising a promise by China’s Ministry of Human Resources and Social Security to start investing from the pension fund by the end of 2016.
“All these signs are showing that the government is speeding up on pension fund investment,” the paper said in a front-page commentary on Wednesday.
“Even if they can’t start investing by the end of this year, it’s very likely to materialise early next year.”
Before investment can start, investment management institutions need to be selected, and the first investing contracts signed between an initial batch of provincial governments and the council, it added.
The paper estimated 2 trillion yuan ($290 billion) is available for investment by the fund, which had a massive reserve of 3.99 trillion yuan ($579 billion) by the end of 2015.
In August last year China said it would, for the first time, allow pension funds to be invested in stocks and other assets. widening a scope until then restricted to lower-yielding bank deposits and treasuries.
The first investment tranche is likely to be 200 billion yuan ($29.1 billion) to 300 billion yuan ($44 billion), with about 20 billion yuan to 30 billion yuan expected to enter the stock market, the paper said, citing Dong Dengxin, a finance professor at Wuhan University of Science and Technology. ($1=6.8855 Chinese yuan) (Reporting by Yawen Chen and Beijing finance team; Editing by Sunil Nair and Clarence Fernandez)