Huatai 1st insurer to start stock trading
(Shenzhen Daily/Agencies)
Updated: 2005-02-23 15:18

Huatai Insurance Company of China Ltd had directly bought domestic shares, the first investment from US$7.2 billion of insurers assets set to be pumped into the beleaguered stock markets.

Details on the investment by Huatai, China's fourth-largest property underwriter, were sketchy. They come after regulators launched new guidelines last Tuesday, removing final hurdles for insurers to invest in domestic stocks directly.

Previously, insurers had to use domestic mutual funds to invest in stocks, driving up costs.

Huatai became the first Chinese insurer to directly trade on China's domestic stock market by building up some positions Thursday,.

Rival China Life Insurance Co Ltd, the country's largest insurer, is expected to enter the market after having obtained trading seats on the Shanghai and Shenzhen bourses.

Half of the insurance assets poised for stock investment are owned by China Life.

Insurers are loaded. Nationwide premiums jumped 11.3 percent to 431.8 billion yuan (US$52.2 billion) last year. They lobbied hard to free up investment rules.

Huatai, founded in 1996 with a paid-in capital of 1.33 billion yuan, is partly owned by Bermuda-based property underwriter ACE Ltd.

Huatai has said it was talking to foreign insurers about expanding into life insurance and has been preparing for domestic and overseas listings. Its asset management arm was set up in January.

Insurers have been given the green light to set up between six and eight asset-management companies (AMCs) -- vehicles for insurers to directly trade in stocks -- by the end of 2005.

China Life Asset Management Co Ltd, the country's largest AMC owned by an insurer, secured its exchange trading seats Monday.

That means the bulk of China's insurance money poised for stock investment will soon enter the markets.

The government has taken a slew of steps to boost slumping markets after the key index fell 15 percent last year.

In the latest move, China planned to create a US$6 billion investment fund by June to support the market.

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