• Interest Rate Risks
 
This term alludes to the risk of asset prices to fall as interest rates rise. A change in interest rates has an apparent effect on the sufficiency of the occupational annuity plan. Interest rate risks is commonly measured by a bond¡¯s duration (the longer the duration, the more sensitive it is to the interest rate), cash flow (the lower the cash flow, the more sensitive it is to the interest rate) and current interest rate level (the higher the interest rate level, the less sensitive it is to the interest rate change). Since these factors have very different effects on different securities assets and different fixed-income securities, impacts on debt structures and assets are various, too.

In general cases, with interest rate rises, bond prices will fall. The rise or drop of the interest rate may also affect stock prices. Presently, the cycle of low interest rate curves of the Chinese and even of global major financial markets is finished. The investment portfolio selection decision for Chinese occupational annuity funds must face up to the facts of a new interest rate cycle.

• Policy Risks

Policy risks are a non-financial risks of the occupational annuity fund investment, caused by national policies, laws, regulations and other external factors that have an impact on the financial market industry.