CBIRC encourages greater investment in medium/long-term corporate bonds by insurers

Written by Adam Cadle

13/07/2020

Chinese insurance institutions should increase their investment in medium and long-term corporate bonds to help accelrate economic recovery folllowing COVID-19, the China Banking and Insurance Regulatory Commission (CBIRC) has said.

In a speech at the 2020 Lukiazui Forum, Chinese politician Gui Shuqing said the average duration of insurance funds is 13 years, and the balance of insurance fund investment is nearly RMB 20trn, among which the balance of investment in corporate bonds is only RMB 2.2trn. “Therefore there is huge room for growth,” he stated.

To support the development of the capital market, the CBIRC plans to launch six pieces of measures in the near future. First, to introduce new institutional investors by approving the establishment of more bank wealth management subsidiaries and insurance asset management companies, and allowing overseas professional institutions to establish and hold a controlling stake in wealth management companies in China. Second, to increase the share of equity products in the newly issued asset management products.

“We will support wealth management subsidiaries to increase the share of equity products, trust companies to issue securities investment trust products, and insurance institutions to issue portfolio products,” he said. Thirdly, the CBIRC said it will promote in-depth cooperation between banks and fund management companies, as well as banks and insurance companies. Banks and wealth management subsidiaries are encouraged to include more qualified public fund managers in their lists of partner institutions.

Efforts will be made to study and promulgate relevant policies for insurance institutions to invest in privately-issued wealth management products and private equity funds. The Commission said it will also help to support insurance companies increase their capital market investment, especially investment in equities of high-quality listed companies, through various channels such as direct investment, entrusted investment and public fund investment. Finally, it will carry out differentiated and proportionate supervision on the holding of equity assets of insurance companies, so as to guide insurance institutions to allocate more funds to equity assets.

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