"Rules of Insurance Funds
Investment on Bank Shares" released recently
Source:
Shanghai Securities News
Date:15 Aug, 2006A
few days ago, an authority told Shanghai Securities News that ¡°Related
notice about the insurance funds investment on shares of commercial
bank¡± (hereinafter referred to as ¡°Notice¡±) will be released recently.
It is said that the Notice will define clearly the bank shares on which
the insurance funds can be invested; the ways to invest; the
qualifications of insurance investment organizations; the risk
prevention of insurance investment organizations and corresponding
management measures, etc. The authority said the Notice will ensure the
smooth flow of liquidity in accordance with the principal of
asset-liability matching management, exercise the classified
supervision over insurance funds, and start the pilot for
asset-liability matching management this year. The authority did not
answer the technical problem concerning the maximum proportion of
investment shares, but he said: the ultimately determined proportion
will not be too high or too low.
At
present, insurance funds invested on fixed income assets and equity
assets (including stock investment, fund investment and equity
investment) occupy separately 90% and 10%. Since CIRC have not released
this ¡°Notice¡±, the proportion of insurance funds that can be invested
on non-listed banks is not clear, but some specific operators of
insurance companies express their cautious attitude toward investments
intentions, policy openness does not mean the influx of insurance
funds. Prior to this, after the announcement that the upper limit of
insurance funds invested on stock is 5%, many companies thought this
proportion was too low. But the fact indicates that the insurance funds
limited amount, instead of being fully used, was deployed according to
the actual situation. As of the end of last year, about 1% of insurance
industry funds entered the market. This year, in accordance with the
capital market situation, insurance companies increase the proportion
of the actual investment on stock, reaching 3%-4% of the total assets
by the first half of this year. The authority reminds that insurance
funds are enthusiastic in terms of bank debt and equity investment,
etc; however the excessive investment of insurance funds in one bank
(including buying the non-listed equity of the bank, investing on the
stock of the listed bank, purchasing bonds issued by the bank, etc)
leads to the increase of risk. He suggests that insurance companies
create a general plan to avoid the unnecessary investment risk.
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