China announced plans to expand a scheme enabling insurance companies to increase their investments in the stock market. This move aims to boost market liquidity and support the nation’s financial markets. Under the expanded scheme, insurers will have greater flexibility in their asset allocations, allowing them to invest in a broader range of equities.
This is part of China’s ongoing efforts to invigorate its capital markets and provide insurers with more robust investment opportunities. The policy shift aligns with the Chinese government’s broader agenda to liberalize financial markets and attract more institutional investors. Analysts believe this will also help stabilize the market and potentially lead to higher returns for policyholders.
Li Yunze, Minister of the National Financial Regulatory Administration (NFRA), announced that eight new policies are set to be introduced shortly, aiming to bolster economic growth. Among the key policies is the expansion of the scope of long-term investment pilots for insurance funds.
Insurers to boost stock investments
The NFRA is preparing to approve an injection of RMB60 billion into the market. This capital infusion aims to boost market confidence and provide incremental growth support. China will allow an additional 60 billion yuan (US$8.3 billion) from long-term insurance funds to be invested in equities as part of the expanded pilot program.
The move is part of Beijing’s broader efforts to shore up financial stability and revive confidence across key sectors. Li emphasized that these efforts are in line with Beijing’s commitment to ensuring financial stability and economic growth. The announcement comes at a time when China is grappling with a property sector slowdown and slower-than-expected economic recovery post-COVID-19.
The dual approach of enhancing insurance capital participation in the equity market and preparing property sector support measures signifies a comprehensive strategy to tackle immediate economic challenges while laying the groundwork for long-term financial stability. This move is seen as part of a series of targeted efforts by policymakers to reinvigorate market confidence and support pivotal sectors in the economy, reflecting the government’s proactive stance in managing economic risks.
