Insurers鈥 stock speculation blasted
Print Edition
THE Chinese insurance regulator said it does not support insurance firms “massively and frequently” speculating in stocks, as recent quick buying and selling of shares by Evergrande Life stirred market worries.
“Evergrande Life should deeply reflect on the negative effects of its practice,” the China Insurance Regulatory Commission said yesterday in an online statement, asking the insurer to uphold the principle of value investing and “make portfolio investment more cautious and stable.”
The CIRC said it has warned executives of the company, which has promised to stop.
Evergrande Life, controlled by property conglomerate Evergrande Group, was criticized for causing volatility in the market by quietly buying shares, hyping the purchases to prop up the prices, and then selling quickly for profits — leaving shares to fall sharply and causing investors huge losses.
Guangdong Meiyan Jixiang Hydropower, one of the insurer’s targets, had jumped by around 50 percent during a weeklong period before Evergrande Life sold its holding at the end of October, which triggered days of price plunges.
The insurer was said to have used the same strategy in shares of many other firms.
Despite gains from the stock market, Evergrande Life lost 965 million yuan (US$142 million) in the third quarter.
The CIRC said it will take timely measures against such cases in the future.
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