Walter Hutchens’ Blog

The China Insurance Regulatory Commission (CIRC) and the China Securities Regulatory Commission (CSRC) have jointly issued new regulations that will allow PRC insurance companies to invest some of their assets directly in China’s domestic securities markets, rather than doing so only through third-party funds.

Limitations include that insurance companies cannot invest in securities:

1. subject to “ST” trading (special treatment);

2. whose price has risen (!) 100% or more within the last 12 months;

3. about which there are suspicions (!) of market manipulation;

4. from an issuer whose auditors refused to approve its financial statements or issued a qualified opinion about them;

5. from an issuer which has disclosed major business reversals or losses or that has disclosed it anticipates major losses.

The CIRC is to separately provide a cap on the percentage of its assets an insurance company can directly put into the securities markets.

As issued the new rules cap the maximum percentage an insurance company can hold in a single listed firm’s A shares at 30%.

An article about the new rules is here.The article indicates there rules are part of implementing the State Council’s “9 Articles.”

This measure is I think of a kind with other recent “jiu shi” or “save the market” measures aimed at bolstering prices in the secondary market, such as increasing the number of OFIIs and their investment quotas.

The full text of the new rules is available in Chinesehere.