Ping An Trust targets quality properties
Ping An Trust, the property investment arm of the nation's second-largest insurer, will look for investment opportunities despite the weakened real estate industry, said the company's chairman, Tung Hoi.
The company, which was hived off from the insurance group in 2002, is looking for investments ranging from hotels to office buildings and other commercial properties.
'Depending on our funding situation, we are still interested in quality property investment,' Mr Tung said, without providing further details.
The company's moves will be closely watched by industry observers as a turning point for domestic insurers looking to diversify into the property industry.
The Chinese Insurance Regulatory Commission revised the Insurance Law in August to allow insurers to invest directly in property and infrastructure projects.
The announcement came as the mainland stock market started to tumble, leaving insurance companies hungry for new investment channels.
Although details of the new rules have not been announced, insurance companies have made some forays into property investment for self use to avoid scrutiny by the industry watchdog.
Insurers are currently only allowed to invest in bank deposits, government and financial bonds, stocks, securities-oriented funds and in non-listed companies as shareholders.
'Real estate projects, which are backed by the local or central government, could bring a much stable returns than equities,' said Castor Pang, a financial strategist with Sun Hung Kai Financial.
'But they should be particularly cautious about the growing risks from the property slump.'
Mainland insurers earned about 93 billion yuan (HK$105.64 billion) from their investments from January to November last year, down more than 60 per cent year on year.
The Shanghai Composite Index lost 65 per cent in the same period.
Of the investment, 84.4 per cent was in bank deposits and bonds, 13.3 per cent was in stocks and mutual funds, and the rest was unspecified.
Meanwhile, Ping An saw huge potential in tapping the money brokerage business as the nation seeks to enhance market transparency and encourage a more active interbank lending market.
Money brokerages act as intermediaries in providing price quotes to financial institutions seeking to buy or sell financial or non-financial products.
The insurer launched a money-broking joint venture with Switzerland's Compagnie Financiere Tradition and began operations last week.
'Money brokerage has just started to take off in China and the market is a lot bigger,' Mr Tung said.
