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Chinese insurers invest $240b into infrastructure, livelihood improvement

Updated: Feb 8,2017 9:39 AM     Xinhua

Chinese insurers had initiated 651 investment projects with registered capital of 1.65 trillion yuan (about $239.8 billion) in infrastructure and livelihood improvement by the end of 2016, official data showed.

The investment was made through equity and bond purchases, as well as asset support plans, which mostly went into transport, energy, real estate, healthcare and elderly care, according to the Insurance Asset Management Association of China (IAMAC).

Chinese insurance capital has also provided funds to national development strategies such as the Belt and Road Initiative, the Yangtze River Economic Belt and the coordinated development of Beijing, Tianjin and Hebei.

Insurers have invested 592.3 billion yuan in the Belt and Road Initiative and 135.9 billion yuan in the Yangtze River Economic Belt by the end of 2016, said the IAMAC.

The association encourages insurance companies to provide funding to develop the country’s real economy, as insurance capital is considered as large and stable long-term funds.

Speaking of stock investment, the IAMAC called for Chinese insurance companies to be friendly investors to listed companies and cornerstones of the capital market, instead of making aggressive stake buyouts and bringing excessive intervention to the operation of the listed companies.

The “barbaric” behavior of some Chinese insurers using leveraged money to buy shares of listed companies raised regulatory concerns late last year. Triggering sharp volatility in the market, such moves annoyed corporate executives and caused individual investors to suffer.

Some 1.88 trillion yuan of China’s investment capital had been put into stocks by the end of November last year, accounting for 14.37 percent of the total, according to the China Insurance Regulatory Commission.

The IAMAC said insurers should avoid speculative investment, safeguard the stability of the capital market and maintain good communications with stake holders and management of listed companies.

The association expects insurance companies to increase the holding of blue-chip stocks to rejig their investment portfolio, as market interest rates will remain low in the period ahead.