Green light for insurers - ResearchInChina
Date:2007-11-08
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TWO insurers have gained approval to inject up to a combined 10 billion yuan (US$1.34 billion) in the Hong Kong stock market under the qualified domestic institutional investor scheme.
The Hang Seng Index gained 0.92 percent to close at 29,708.93 yesterday on the news.
Ping An Insurance (Group) Co (stock code: 601318) and Huatai Insurance Co were given the go-ahead by the China Insurance Regulatory Commission to tap overseas markets under the QDII scheme by converting up to five percent of their previous year's total assets into foreign exchange and invest in H-shares and red chips, a document said.
For Shenzhen-based Ping An, that figure includes the US$1.75 billion QDII quota that it has already gained from authorities.
Assets at Ping An, China's second biggest insurer, sat at 441.8 billion yuan at the end of 2006. A five percent investment top limit would therefore mean it can invest about nine billion yuan more in the Hong Kong market.
Beijing-based Huatai Insurance Co recorded assets of 19.29 billion yuan last year, so it can invest about one billion yuan in Hong Kong.
H-shares are the shares of mainland companies and red chips are shares of overseas-incorporated companies whose main business is derived from the Chinese mainland.
China introduced the QDII program last year to channel part of its mounting foreign exchange reserves and ease the inflows of cash into the domestic stock market. China's forex reserves have already topped US$1.43 trillion.
Stephen Green, a Standard Chartered senior economist, predicted that China's forex reserves will top US$1.61 trillion and further increase to US$2.16 trillion next year.
By September, China set a combined quota of US$42.2 billion through the QDII program for commercial banks, insurers and fund managers.
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