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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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