In a move aimed at bolstering market sentiment, China has introduced new measures making it easier for insurance firms to invest in its domestic stocks.
The latest step by the country’s National Administration of Financial Regulation focuses on the lowering of risk weighting for investments in the CSI 300 Index members and stocks listed on the Star market.
Furthermore, there will be a reduction in the minimum capital requirements for insurers. This new directive complements Beijing’s recent initiatives to uplift investor confidence, such as cutting down transaction costs and putting a limit on top shareholders from offloading their stakes.
However, these measures seem to have made minimal impact on the market’s downturn. As highlighted by the statistics, the CSI 300 has seen a sharp decline of 11% since reaching its peak in January of this year, following a drop of 22% in 2022. The overarching goal behind these actions is to guide insurance companies to bolster capital market development and promote technological innovation. Insurers are now being encouraged to focus on creating long-term products.
Reflecting on these changes, China Life Insurance Group Co’s chief investment officer, Wang Junhui, mentioned in the China Securities Journal, “Insurers may speed up the flow of funds into the capital market after the new rules.”
In a similar vein, the China Securities Regulatory Commission (CSRC) had previously reached out to key stakeholders, including executives from insurance companies, the country’s pension fund, and leading banks. The objective was to amplify their support for the market. The collective consensus was a commitment to stabilise the share market and foster economic development, as confirmed by a statement from the CSRC.
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