SHANGHAI : China's second largest life insurer Ping An Insurance Group and Huatai Insurance Co have received permission to invest in Hong Kong stocks on behalf of clients, state media said Wednesday.
The two insurers are allowed to invest up to five percent of their total assets in Hong Kong stocks, the Shanghai Securities News reported, citing unnamed sources.
Previously major insurers like the country's largest life insurer China Life and Ping An were only allowed to invest in overseas equity markets with their own funds, but not with money from their own customers.
With the approval, Ping An and Huatai would be able to provide equity investment products that convert funds in the local yuan currency collected from domestic investors to trade Hong Kong-listed shares.
Based on their assets figures at the end of 2006, Ping An is likely to invest as much as 22 billion yuan (2.9 billion dollars) for its clients in Hong Kong while Huatai could invest up to 964.5 million yuan, the report said.
The move is widely regarded as a test case, and if it goes well, other Chinese insurance firms may be allowed to do the same thing, according to observers.
China has approved banks, securities houses and fund managers to provide products that invest in Hong Kong stocks as part of its efforts to expand investment channels for mainland investors and encourage capital outflows.
Beijing also announced a plan in August that would allow domestic individuals to directly invest in Hong Kong stocks but the programme was delayed on concerns over the impact of fund-draining on mainland bourses.
Chinese Premier Wen Jiabao reportedly urged caution on the eagerly-awaited plan and set conditions for the implementation of the scheme over the weekend which sent the Hong Kong market down five percent Monday.
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