TAIPING Life Insurance Co said yesterday it has gained regulatory approval to invest in H-shares and red chips in the Hong Kong stock market.
The Shanghai-based insurer can invest in the Hong Kong market with up to five percent of its previous year's total assets, including foreign currencies, and convert yuan assets into foreign exchange to tap investment opportunities under the qualified domestic institutional investor scheme.
"The go-ahead can help us better leverage the insurance capital and increase returns," Taiping said yesterday in a statement.
Its assets topped 30 billion yuan (US$4 billion) at the end of 2006. The five-percent limit means a maximum capital outflow of 1.5 billion yuan.
The insurer is the third player to be approved after Ping An Insurance and Huatai Insurance. The latter two have gained approval to invest up to five percent of their previous year's total assets in red chips and H-shares under the QDII scheme.
H-shares are stocks of mainland firms and red chips are shares of overseas-incorporated companies whose main business is derived from the Chinese mainland.
China started the QDII program last year to channel part of its huge foreign exchange reserves of US$1.4 trillion.
China has allowed a combined quota of US$42.2 billion via the QDII program at the end of September to commercial banks, insurers and fund management firms.