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BIZCHINA / News
Insurers to pour $39b into overseas market
By Hu Yuanyuan (China Daily)
Updated: 2007-07-26 08:32
More than 300 billion yuan ($39.5 billion) is ready to flow into the
international market with China's insurance companies getting government
approval to invest abroad.
The new rules that became effective yesterday raised Chinese insurers'
overseas investment ceiling from 5 percent of their assets to 15 percent,
said a China Insurance Regulatory Commission (CIRC) statement. The CIRC,
Bank of China and the State Administration of Foreign Exchanges jointly
issued the rules.
At the end of 2006, the industry's total assets were valued at 2 trillion
yuan ($263 billion).
The immediate beneficiary of the new rules may be Hong Kong. Mainland
companies' shares traded in Hong Kong, or H shares, are likely to be "the
main target" of insurers, said Central University of Finance and
Economics professor Hao Yansu, who specializes in the insurance industry.
Shenyin & Wanguo Securities Co analyst Yu Bin said: "Given the continuing
revaluation of the renminbi, the overseas investment of most insurers is
likely to target equities rather than bonds."
According to the rules, only insurance companies with a capital adequacy
ratio of 10 percent or more can invest abroad. The products that they can
invest in include bank deposits, commercial bills, bonds, monetary funds
and stocks.
But the CIRC statement has warned insurers to be "very careful" while
investing in financial derivatives.
Orient Securities Company analyst Wang Xiaogang said it's unlikely for
the mainland stock market to get a jolt from the move because "some of
the domestic capital has already flowed into Hong Kong and the general
price gap between H shares and A shares in Shanghai and Shenzhen is
narrowing".
Insurers will cash in on the chance to expand their investment overseas,
even though the domestic stock market is passing through its best phase
in seven years. But again, overseas expansion is important for the
diversification of their investment portfolios, he said.
(For more biz stories, please visit Industry Updates)
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