Beijing has given the 130 insurers on the mainland wider access to domestic and overseas securities, part of a bold step to encourage high-yield investments amid a stock market downturn this year.
The China Insurance Regulatory Commission announced in a circular yesterday that insurers could invest up to 25 per cent of their assets in mainland-listed A shares and domestic securities funds, up from the previous cap of 20 per cent.
According to the new rules, insurers with total assets of 4.3 trillion yuan (HK$4.92 trillion) are also allowed to allocate as much as 15 per cent to overseas bonds and equities, a huge increase from the amount they can invest now.
Mainland insurers could now invest 5 to 10 per cent of their assets in overseas stocks, securities funds and bonds based on their solvency.
The new rules followed on the heels of a CIRC statement last week that raised the investment cap for insurers' purchase of infrastructure debts and properties.
'It is a drastic move to expand insurers' investment channels other than banking deposits and fixed-income products,' said Huatai Securities analyst Liu Peng. 'The rules were obviously designed for them to chase high returns coupled with high risks.'
