FINANCE

China to Pump $13.7 Billion of Insurance Funds into Stock Markets

Published: Jan. 23, 2025 11:43 p.m. GMT+8

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An electronic ticker displays the figures for the SSE Composite Index, top, and the SZSE Composite Index on a footbridge in Pudong's Lujiazui Financial District in Shanghai, on Jan. 21, 2025. Photo: Bloomberg

China is planning to inject at least 100 billion yuan ($13.7 billion) in insurance funds into its stock market in the coming months, as part of state-backed efforts to attract long-term investment to strengthen the market, according to the country’s top financial regulators.

“We are preparing to approve 50 billion yuan in the coming days, before the Chinese New Year, to be immediately invested in the stock market,” said Xiao Yuanqi, vice-minister of the National Financial Regulatory Administration, at a Thursday press briefing.

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China plans to inject at least 100 billion yuan into its stock market via insurance funds, with 50 billion yuan to be approved before the Chinese New Year as part of a pilot program.
Initiatives aim to increase stock market investment by mandating state-owned insurance companies to allocate a significant portion of new premiums to the market.
The initial pilot saw a 50-billion-yuan fund boost, supported by China Life and NCI, contributing to solid market performance and stable capital infusion.

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Who’s Who

China Life Insurance Co. Ltd.: China Life Insurance Co. Ltd. is part of China's state-owned insurers that launched a 50-billion-yuan fund in November 2023 to boost stock market investment. It contributed 25 billion yuan to the Honghu Private Securities Investment Fund, which had a paid-in capital of 32.01 billion yuan by September 2024. The fund maintains profitability and stability while investing in companies like Inner Mongolia Yili Industrial Group Co. Ltd. and Shaanxi Coal and Chemical Industry Group Co. Ltd.

New China Life Insurance Co. Ltd.: New China Life Insurance Co. Ltd. (NCI) participated in the initial phase of a 50-billion-yuan fund to boost stock market investments. NCI committed 25 billion yuan to the Honghu Private Securities Investment Fund Co. Ltd. By July, NCI's chairman reported the fund had invested over 20 billion yuan into the market, providing stable, long-term capital.

Honghu Private Securities Investment Fund Co. Ltd.: Honghu Private Securities Investment Fund Co. Ltd. was launched by China Life Insurance Co. Ltd. and New China Life Insurance Co. Ltd. as part of a pilot program to boost insurers' stock market investments, with each contributing 25 billion yuan. By September 2024, the fund's paid-in capital reached 32.01 billion yuan and had invested over 20 billion yuan. It holds significant shares in Inner Mongolia Yili and Shaanxi Coal and Chemical Industry, totaling around 5.4 billion yuan.

Inner Mongolia Yili Industrial Group Co. Ltd.: The Honghu Private Securities Investment Fund Co. Ltd. has invested in Inner Mongolia Yili Industrial Group Co. Ltd., with the fund's market value of holdings in Yili totaling about 5.4 billion yuan as of the third quarter's end.

Shaanxi Coal and Chemical Industry Group Co. Ltd.: Shaanxi Coal and Chemical Industry Group Co. Ltd. is a company in which the Honghu Private Securities Investment Fund holds a stake, valued at part of a 5.4 billion yuan investment alongside Inner Mongolia Yili Industrial Group Co. Ltd., as of the end of the third quarter. This indicates the fund's strategic investments in major companies within China's financial market.

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What Happened When

October 2023：: Approval of the second phase of a pilot program for insurers to set up stock investment funds.

November 2023：: China Life Insurance Co. Ltd. and New China Life Insurance Co. Ltd. launched a 50-billion-yuan fund as the first phase of the pilot to boost insurers' investment in the stock market.

July 2024：: NCI chairman Yang Yucheng disclosed that the fund had invested more than 20 billion yuan into the financial market.

By the end of September 2024：: The Honghu Fund's paid-in capital reached 32.01 billion yuan.

End of the third quarter 2024：: The market value of the Honghu Fund's holdings in Inner Mongolia Yili Industrial Group Co. Ltd. and Shaanxi Coal and Chemical Industry Group Co. Ltd. totaled about 5.4 billion yuan.