China’s top insurers to launch US$7 billion fund to invest in onshore shares in sign of rising state support
- New China Life Insurance and China Life Insurance will each invest US$3.5 billion in the equity fund that will be managed by Honghu Private Securities Investment Fund
- The fund is aimed at increasing longer-term investment assets that suit the company’s strategy and improve the efficiency of capital use, New China Life says
Two state-backed Chinese insurance firms plan to launch a joint 50 billion yuan (US$7 billion) private fund to invest in yuan-denominated shares as policymakers ramp up support for the struggling stock market.
The stock fund is aimed at increasing longer-term investment assets that suit the company’s strategy, optimising the structure of assets and liabilities and improving the efficiency of capital use, New China Life said. It did not provide details about the investment scope of the fund.
Central Huijin Investment, a unit of China’s US$1.35 trillion sovereign wealth fund, owns a 31 per cent stake in New Life Insurance. China Life, which did not issue a statement on the fund formation, is controlled by the finance ministry.
The fund will mainly invest in China’s onshore listed companies with good corporate governance and stable business operations, according to Huatai Securities. Both New China Life and China Life did not answer calls made by the Post seeking comment.
“The private fund is expected to focus on the equity market in response to policymakers’ call,” said Liu Xinqi, an analyst at Guotai Junan Securities in Shanghai. “That comes against the backdrop of regulators urging financial institutions to be a bulwark of the industry and guide long-term insurance investments into the market.”
