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China regulator lowers insurers' caps on stock investment

[BEIJING] China's insurance regulator is reimposing ceilings on funds insurers can put into the stock market, in the latest move to control risk and limit how much insurance assets are invested in listed companies.

Insurers will be restricted to investing no more than five per cent of their total assets, as of the end of the previous quarter, in a single stock, the China Insurance Regulatory Commission (CIRC) said in a statement on Tuesday.

Insurance firms also will be restricted to placing no more than 30 per cent of their total assets in equities, the statement said.

The rules return China's insurers to investment limits that were in place ahead of the stock market crash in 2015, when the regulator loosened rules to boost stock purchases.

"Quitting the temporary market rescue policy will help insurance companies prevent stock investment concentration risks," CIRC said in Tuesday's statement.

Insurance firms will have two years or more to lower their investment allocation to the required level, the statement said.

China's insurers have invested 1.2 trillion yuan (S$248.529 billion) in stocks, accounting for no more than 10 per cent of invested insurance assets, CIRC said in the statement.

In recent weeks, CIRC has rolled out new rules aimed at limiting risk, by tightening the shareholding structure at insurance firms and limiting how insurance assets are invested.

Those measures include lowering from 51 per cent to one-third the biggest stake a single shareholder can take in an insurance firm and forbidding insurers to use wealth management funds to invest in themselves.

CIRC also has announced rules to tighten compliance management systems. REUTERS

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