Chinesepod - Insurers allowed to double stock investment

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BIZCHINA / Center

Insurers allowed to double stock investment

(Bloomberg)
Updated: 2007-07-12 17:05

China will allow insurers to double the share of assets invested in local
equities to 10 percent, said industry executives briefed by the insurance
regulator.

The China Insurance Regulatory Commission (CIRC) has told the asset
management arms of insurance companies to prepare for buying more
domestic stocks, said the industry executives, declining to be identified
as the regulator hasn't announced the plan yet.

China Life Insurance Co, Ping An Insurance Co and rivals can seize on the
new rule to boost returns from their $321 billion of assets as premium
growth slows. Insurance companies may use some of the funds to invest in
companies traded in Hong Kong which are planning to sell yuan-denominated
shares on the mainland.

"This is aimed at increasing the profits of the insurers," said Huang
Huamin, a Beijing-based analyst at CITIC Securities Co.

The news could not be immediately confirmed with the insurance regulator
or the top insurers.

China Life's shares jumped 4.5 percent and Ping An stock rose 3.9 percent
in Shanghai yesterday.

The CSI 300 Index rose 0.7 percent yesterday, bringing gains this year to
87 percent - the second-best performance among the world's major
benchmarks.

The Hang Seng China-Affiliated Corporations Index, comprising mainland
companies incorporated and traded in Hong Kong, gained 2.6 percent. This
index has jumped 18 percent in the past month.

"Insurers mostly buy blue-chip shares, so an increase of funds may push
up prices of big companies like banks," said Yi Yangfang, who helps
manage about $5 billion at GF Fund Management Co.

(For more biz stories, please visit Industry Updates)

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