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Jul 2020

China - Insurers snap up equities despite market turbulence in sign of confidence - CIRC

Source: Asia Insurance Review | Aug 2015

From about mid-June to mid-July, Chinese insurers bought a total of CNY112.3 billion (US$18.1 billion) of equities in the stock market as a sign of confidence, said CIRC.
   Insurance firms invested CNY57.4 billion directly in equities and CNY54.8 billion in equity funds from the start of the market fall till 8 July, reported Xinhua News Agency.
   The benchmark Shanghai Composite Index plunged by more than a third in the weeks between 12 June, when the index stood at a peak of 5,166.35, and 8 July, sparked by restrictions on margin trading and panic selling.
CIRC encourages insurers to invest in blue chip stocks
Last month, in moves to support the falling stock market, CIRC increased the limits for insurers to invest in blue chip stocks. CIRC said that insurance companies can invest 10% of their total assets into a single blue chip stock, double the previous 5% limit. The CIRC also said that insurance companies that have reached their 30% investment limit will be able to invest another 10% of total assets in blue chips.
   CIRC is also allowing insurers which have lent money to stock brokerages to renegotiate deadlines for repayment, and is forbidding them from demanding repayment of the loans ahead of the deadline. Some asset management arms of insurance companies had launched investment products and entered into repurchase and other lending businesses with brokerages to fund margin financing.
   CIRC’s actions were part of a slew of measures taken by the government to stem the fall in the stock market. For instance, the securities regulator ordered shareholders with stakes of more than 5% not to sell their holdings for the next six months.
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