New | Chinese insurers await green light to get into OTC market
Third board in China seen as new investment channel with the lure of promising start-ups
The mainland's over-the-counter (OTC) equity market may get a fresh boost with a much anticipated regulatory nod to insurance funds looking to invest in start-ups.
According to two insurance industry officials, several insurers are studying the OTC market as a new investment channel. The officials said insurers plan to invest in some of the promising start-ups listed on the market when the regulator gives the green light.
Chinese insurers are not allowed to invest in companies traded on the nationwide electronic equity transfer system, known as the country's third board, unless the China Insurance Regulatory Commission gives them the go-ahead.
The sources said the commission was likely to allow them to invest part of insurance funds in the OTC market soon, in response to the leadership's call for efforts to boost technological innovation.
With more than 10 trillion yuan under the management of insurers, even a fraction of their investments in the third board would give the new market a new lease of life.
"The regulator is fully aware of the necessity for insurers to allocate part of funds in start-ups," said an executive with a Shanghai-based insurance firm who did not want to be identified. "It will soon let us do so, but initially the fund size for the OTC market will be small because of high risks."
The commission could not be reached for comment.