China expanding stock selling restrictions to insurers, sources say

CHINA is expanding its net stock selling ban from major mutual funds to some insurers, in another sign that authorities are trying to support the slumping stock market, said people familiar with the matter.

Regulators issued the so-called window guidance to at least two state-owned insurance firms on Monday (Jan 22), telling them to refrain from selling more onshore shares than they purchased, said the people, who asked not to be identified discussing private information. 

This is the first time that these firms have received such guidance, which was commonly given last year but usually only to large mutual funds, the people said. Another top insurer said it got the instructions in early January, one of the people added. 

The Shanghai Stock Exchange did not immediately reply to a fax seeking comment.

The move comes as Chinese authorities consider a package of measures to shore up the stock market. Policymakers are seeking to mobilise about US$279 billion, mainly from the offshore accounts of state-owned enterprises, as part of a stabilisation fund to buy shares onshore through the Hong Kong exchange link, Bloomberg reported on Tuesday. 

Premier Li Qiang called for more rigorous and effective measures to stabilise the market on Monday, after the benchmark CSI 300 Index fell to a five-year low.

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Chinese stocks have been hammered by factors ranging from the nation’s property crisis to rising geopolitical tensions and fears of a deflationary spiral in the world’s second-largest economy.