| Insurers allowed to double share investment |
BEIJING, April 9 -- The insurance regulator has given insurance companies permission to double, to 10 percent, the proportion of assets they may hold in domestic equities, industry sources said on Friday.
Given that domestic insurers' assets totaled 1.97 trillion yuan (255 billion U.S. dollars) at the end of 2006, the relaxation will potentially allow as much as 100 billion yuan to flow into the stock market.
The move is part of a drive by the government to broaden the investment channels open to insurers, which have most of their assets in low-yielding bank deposits and bonds.
An executive at the asset management arm of a leading insurer said his firm had been informed orally of the policy change.
He said some insurance asset management firms had already received special approval to invest more than 5 percent of their assets in stocks.
For example, strategic stakes in some listed banks, which must be held for two years, have not been counted as part of the quota.
Despite the relaxation, he said he would not be pumping more money into stocks right away because the market is already highly priced. "We will wait and see," he said.
The China Securities Journal reported Friday that the China Insurance Regulatory Commission would also soon scrap a ban on insurers buying stocks that have doubled in price over the previous year.
The regulator recently held a meeting with a dozen big insurance companies to discuss relaxing the ban because so many shares have risen sharply during the stock market's record rally, the paper said.
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