Interim Measures on Administration of Stock Investment by Insurance Institution Investors

2004/10/27

Issued: October 24, 2004

Effective: October 24, 2004

Issuing Authorities: The China Insurance Regulatory Commission ("CIRC") and the China Security Regulatory Commission ("CSRC")

Main Contents: Subject to the requirements provided in these measures, insurance assets management companies and insurance companies can invest in securities. Insurance companies investing in or commissioning an insurance assets management company to invest shall apply to the CIRC for approval.

Insurance institution investors can invest in RMB normal stock, convertible company bond, and other types of investment provided by the CIRC either by making purchases in the first-class security market or by trading in the second-class security market. The Measures prohibit insurance institution investors from investing in certain types of stocks, such as ST stocks, *ST stocks, and stocks with terminated listings. Furthermore, insurance institution investors may not hold more than 30 percent of one listed company's renminbi normal stock.

According to a CIRC official's speech at the press release, insurance institution investors cannot invest more than 5 percent of their total assets of the preceding year (based on cost price) in the stock market.

Narrow investment scope has impeded the growth of China's insurance industry in the past. These measures allow insurance institutions to directly invest in stocks, which will benefit insurance companies by enhancing their repayment capacity and by allowing them to save a large amount in management fees that they used to pay to fund managers.



	Article featured in Business Beijing, November 2004 Publication sponsored by Information Office of the Beijing Municipal Government, Beijing Municipal Bureau of Commerce, Development & Reform Commission of Beijing Municipality, China Council for the Promotion of International Trade (Beijing Sub-Council)