Mainland insurers can buy HK shares via Shanghai link

September 12 2016 by InsuranceAsia News Staff

Mainland Chinese insurers have been given approval to buy equities on the Hong Kong stock market through the Shanghai stock link and the soon-to-be introduced Shenzhen link.

In a notice posted by the China Insurance Regulatory Commission (CIRC) on its website, mainland insurers are now permitted to join in the Shanghai-Hong Kong stock connect programme under the “prudential and safe” principle.

Analyst Yi Zhang, with Shenwan Hongyuan Securities in Shanghai, said the move is expected to unlock a large amount of capital as many big insurers have been keen on investing in the Hong Kong stock market since earlier this year, but could only buy through the Qualified Domestic Institutional Investor (QDII) channel.

An estimated Rmb1 trillion (US$150 billion) of funds from insurers is said to be available, according to Zhang, but a large chunk has been already earmarked through the QDII route.

QDII was introduced by the Chinese government a decade ago to allow Chinese investors to trade overseas equities and fixed-income products.

However, the quota has been frozen at US$90 billion since March 2015 as authorities struggle to stem capital outflows, mainly fueled by further depreciation of the yuan.

 

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