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New rule gives insurers more investment options
By Zhang Fengming |
August 6, 2010, Friday
|
Online Edition
Online Edition
AN extra 400 billion yuan (US$59 billion) can be freed to invest in the stocks market from August 31 on a new rule that stimulated investment sentiment today.
The benchmark Shanghai Composite Index grew 1.44 percent to 2,658 today. The financial sector gained 3.09 percent.
Under a new rule from the China Insurance Regulatory Commission effective from August 31, insurers can invest up to 20 percent of their assets in stocks and funds in the equities market.
Previously, insurers can invest at most 20 percent of their assets in stocks and funds, including funds betting on currency, stocks and bonds.
"The new rule posted on Thursday meant that insurers enjoy broader investment channels," said an investment officer with a major insurer in Shanghai today. "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 new rule also allowed insurers to invest up to 10 percent of their capital in the real estate market, such as through buying Real Estates Investment Trusts. The cap is bigger than market expectation. Insurers are banned from developing properties directly.
As the end of June, insurance investment capital rose to 4.17 trillion yuan, up 11.3 percent from year-start. Among them, 30.5 percent are put in bank deposits and 51.8 percent in bonds. Equities investment, including stocks, funds, equities of non-listed companies, accounted for 15.1 percent of the total insurance investment capital.
Insurers in China made an investment return of 75.5 billion yuan in the first half, with their stock investment outperforming the broad market.
The benchmark Shanghai Composite Index grew 1.44 percent to 2,658 today. The financial sector gained 3.09 percent.
Under a new rule from the China Insurance Regulatory Commission effective from August 31, insurers can invest up to 20 percent of their assets in stocks and funds in the equities market.
Previously, insurers can invest at most 20 percent of their assets in stocks and funds, including funds betting on currency, stocks and bonds.
"The new rule posted on Thursday meant that insurers enjoy broader investment channels," said an investment officer with a major insurer in Shanghai today. "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 new rule also allowed insurers to invest up to 10 percent of their capital in the real estate market, such as through buying Real Estates Investment Trusts. The cap is bigger than market expectation. Insurers are banned from developing properties directly.
As the end of June, insurance investment capital rose to 4.17 trillion yuan, up 11.3 percent from year-start. Among them, 30.5 percent are put in bank deposits and 51.8 percent in bonds. Equities investment, including stocks, funds, equities of non-listed companies, accounted for 15.1 percent of the total insurance investment capital.
Insurers in China made an investment return of 75.5 billion yuan in the first half, with their stock investment outperforming the broad market.
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