News eDaily20 Jun 2017

China:Rules to be loosened to encourage insurers' investments in commodity futures

20 Jun 2017

China's securities regulator has said that it will loosen restrictions that limit how insurance companies, commercial banks and pension funds invest in commodity futures, reported Reuters.

The China Securities Regulatory Commission (CSRC) said that it will encourage wealth management firms to invest in commodity futures in a bid to promote its domestic derivatives industry and raise the amount of commodities in the nation's assets under management, Mr Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), said in a speech at a financial forum last Saturday that was released on the CSRC's website.

Mr Fang did not give further details on the proposal.

"Commodities are indispensable resources for the industrial economy," he said.

His comments underscore growing government backing for derivatives markets for commodities ranging from copper to oil to fruits in a bid to support the real economy, as Beijing ramps up regulation of equities markets and tries to tame its red hot property market.

However, any major push by wealth managers into the futures sector could also increase volatility in prices of raw materials, like iron ore.

To illustrate the vast size of China's personal wealth, Mr Fang referred to a report by Boston Consulting Group, which showed assets held by individuals reached US$176 billion last year, behind only the US. About 40% of that is in bank savings and wealth management, another 40% is in real estate, 10% in the stock market and another 10% in trusts and other products, the report showed.

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