Mainland Chinese Insurers are investing in Hong Kong exchange traded funds (ETFs) after regulators cleared such activity last month.
The mainland Chinese insurance sector, valued at CNY41tn ($6.1tn) is increasingly investing in Hong Kong's equity market, reported the South China Morning Post.
The National Financial Regulatory Administration, which oversees China’s banking and insurance industries, granted insurers access in August to Hong Kong-listed ETFs through the cross-border Stock Connect programme.
The Stock Connect scheme is a link between mainland China’s stock exchanges and Hong Kong’s stock market. It lets investors in mainland China buy many Hong Kong-listed shares without having to invest through a traditional offshore route.
China has been taking several steps to increase financial activity in Hong Kong and reinforce its position as a major global financial hub. Before this, mainland Chinese insurers were allowed to buy bonds traded in Hong Kong.
In addition, Chinese government bond futures traded outside mainland China were permitted to start trading in Hong Kong. Chinese insurance companies will now become another important group of investors from mainland China buying Hong Kong stocks.