Insurers broaden investment
By Zhang Fengming |
August 7, 2010, Saturday
|
Print Edition
Print Edition
INSURERS can invest an extra 400 billion yuan (US$59 billion) in the stock market from August 31 under a new rule that stimulated investors in the share market yesterday.
The China Insurance Regulatory Commission has said insurers can invest up to 20 percent of their gross assets in stocks and funds invested in the equities market from August 31.
"The new rules posted on Thursday meant that insurers enjoy broader investment channels," an investment officer with a major insurer said in Shanghai yesterday. "Though the freed money won't be necessarily fully flow into the stock market, it's a positive signal indeed for the lukewarm stock market."
The benchmark Shanghai Composite Index rose 1.44 percent at the close yesterday. The financial sector gained 3.09 percent.
The new rules also allow insurers to invest up to 10 percent of their capital in the real estate market, such as real estate investment trusts. The cap is bigger than market expectation. Insurers are banned from developing properties directly.
Some insurers have already tiptoed into real estate with a small proportion of their capital.
"For insurers, the new rules act as a beacon as it sets clear rules on their investment options and areas," the insurance investment official said.
China had long planned to broaden investment options for insurers, which were previously limited mainly in the areas of low-return bonds, bank deposits and currency products.
The new rules will allow insurance companies to invest in higher risk markets, such as property, infrastructure and equities, that offer higher returns.
At the end of June, insurance investment capital rose to 4.17 trillion yuan, up 11.3 percent from January. Among the investments, 30.5 percent was in bank deposits and 51.8 percent was in bonds. Equities investment, including stocks, funds, and equities of non-listed companies, accounted for 15.1 percent of the total insurance investment capital.
Insurance companies in China made an investment return of 75.5 billion yuan in the first half of this year, with their stock investments outperforming the broader market.
The China Insurance Regulatory Commission has said insurers can invest up to 20 percent of their gross assets in stocks and funds invested in the equities market from August 31.
"The new rules posted on Thursday meant that insurers enjoy broader investment channels," an investment officer with a major insurer said in Shanghai yesterday. "Though the freed money won't be necessarily fully flow into the stock market, it's a positive signal indeed for the lukewarm stock market."
The benchmark Shanghai Composite Index rose 1.44 percent at the close yesterday. The financial sector gained 3.09 percent.
The new rules also allow insurers to invest up to 10 percent of their capital in the real estate market, such as real estate investment trusts. The cap is bigger than market expectation. Insurers are banned from developing properties directly.
Some insurers have already tiptoed into real estate with a small proportion of their capital.
"For insurers, the new rules act as a beacon as it sets clear rules on their investment options and areas," the insurance investment official said.
China had long planned to broaden investment options for insurers, which were previously limited mainly in the areas of low-return bonds, bank deposits and currency products.
The new rules will allow insurance companies to invest in higher risk markets, such as property, infrastructure and equities, that offer higher returns.
At the end of June, insurance investment capital rose to 4.17 trillion yuan, up 11.3 percent from January. Among the investments, 30.5 percent was in bank deposits and 51.8 percent was in bonds. Equities investment, including stocks, funds, and equities of non-listed companies, accounted for 15.1 percent of the total insurance investment capital.
Insurance companies in China made an investment return of 75.5 billion yuan in the first half of this year, with their stock investments outperforming the broader market.
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