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China’s Relaxation of Insurers’ Investment Rules Unleashes New Opportunities in Stock Markets

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China’s Financial Regulator Reduces Risk Weighting for Insurance Companies’ Stock Holdings

People walk past a screen displaying the Hang Seng stock index at Central district, in Hong Kong

FILE PHOTO – People walk past a screen displaying the Hang Seng stock index at Central district, in Hong Kong, China October 25, 2022. REUTERS/Lam Yik/File Photo Acquire Licensing Rights


China’s financial regulator has reduced the risk weighting it attaches to insurance companies’ holdings of blue-chip shares and tech stocks. This move aims to encourage insurers to invest more in the country’s lagging stock market.

Reduced Risk Weighting

  • The National Administration of Financial Regulation (NAFR) announced that the risk weighting for CSI300 Index constituents would be reduced from 0.35 to 0.3.
  • The risk weighting for stocks listed on Shanghai’s tech-focused STAR Market would be cut from 0.45 to 0.4.

A lower risk weighting frees up more capital for insurers to invest.

Other Changes

  • The regulator also reduced the risk weighting for investments in Real Estate Investment Trusts (REITs), which mainly channel money into infrastructure projects in China.
  • A relatively low risk weighting was set for private equity investments in China’s strategic and emerging sectors.

Boosting Investor Confidence

China has implemented various measures to boost investor confidence and revive its stock market. These measures include halving stamp duty on stock trading and slowing the pace of initial public offerings (IPOs).

Reporting by Samuel Shen in Shanghai and Yew Lun Tian in Beijing; Editing by Christina Fincher

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