PING An Insurance (Group) Co, China's second-biggest insurer, plans to buy into emerging-market financial companies and infrastructure after the government broadens the scope for overseas investment by insurers.
"We want to diversify risk away from our China portfolio," Chief Operating Officer Louis Cheung said at a press briefing in Hong Kong. "Investment channels like long-term corporate bonds are underdeveloped in China, so putting more money into overseas holdings will help cover our long-term liabilities."
China plans within two months to allow its insurers to diversify investments by putting as much as 15 percent of assets abroad, the industry regulator said on Friday. China's insurers want to raise returns on their 1.9 trillion yuan in assets while spreading risk after the nation's CSI 300 Index more than doubled this year, sparking concerns about a stock bubble.
"It's a very positive development for Chinese insurers to be able to expand their investment channels and portfolios," Dominic Chan, a Hong Kong-based analyst at CLSA Asia-Pacific Markets, told Bloomberg News.
The change would let Ping An, with 494.3 billion yuan (US$64.6 billion) worth of assets at the end of 2006, invest as much as 74 billion yuan overseas.
Currency caution
Ping An's fund unit in Hong Kong, for which the insurer received regulatory approval in March, will be the main vehicle for overseas investments, according to Cheung.
"We're mindful of the currency risk associated with overseas assets as the Chinese yuan continues to appreciate. Insurers have long time horizons. Overseas diversification will be a slow, gradual process," Cheung said.