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 in another sign of state support for the struggling stock market.
The plan is aimed at increasing longer-term investment assets that suit the company’s strategy, optimise the structure of assets and liabilities and improve the efficiency of capital use, New China Life said in the statement. It did not provide details about the investment scope of the fund.
China Life did not issue a statement on the proposed fund.
The fund will mainly invest in China’s onshore listed companies with good corporate governance and stable business operations, according to Huatai Securities. Local media outlet Cailian Press confirmed this, citing unidentified officials from New China Life.
“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 guiding long-term insurance investments into the market.”
The move by the two-state-backed insurance firms adds to evidence that state support for China’s US$9.7 trillion stock market is well under way.
So far, a raft of market-boosting measures by policymakers, from the cut in the stamp duty to state buying of banking stocks and exchange-traded funds, have done little to restore investors’ confidence.
The benchmark CSI 300 Index has dropped 2 per cent in November, heading for the fourth straight monthly decline.