CBIRC to Push Chinese Wealth Management Companies to Lift Equity Investments, Allow Insurance Funds to Buy ChiNext, STAR Market Stocks

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The China Banking Regulatory and Insurance Commission (CBIRC) has flagged efforts to push bank wealth management vehicles to lift their share of investment in equities, amidst a broader campaign to improve the quality and clout of the country’s capital markets.

CBIRC deputy-chair Cao Yu (曹宇) said that the authority would “support bank wealth management companies in raising the share of their equity products, and encourage more qualified fund investors to be included on the list of bank wealth management cooperative organisations.”

CBIRC will also allow insurance funds to be invested in stocks on the ChiNext board of the Shenzhen Stock Exchange and the STAR Market Board of the Shanghai Stock Exchange.

“China’s capital market investors suffer from the problem of structural inequality, and there is still considerable room for optimisation” said Cao at the Inaugural Shenzhen Advanced Demonstration Zone Financial Summit (深圳先行示范区首届金融峰会) on 20 December.

“For example, the share of retail investors on the stock market is too high, while bank funds have long held the dominant role on the bond market.

“Over 70% of outstanding bonds on the Chinese bond market are held by commercial banks, and for some types of debt banks account for over 90% of holders.

“Only with various types of specialist investors that are active on capital markets is it possible to achieve a healthy operating state with diversified investment strategies, tiered risk preferences and balanced funding resources, and thus take advantage of the functional advantages of capital markets when it comes to the selection of high-quality companies, accurate pricing of assets, and scientific diffusion of risk.”

According to CBIRC data as of the end of October 2020 bank wealth management funds had made investments of nearly 17 trillion yuan in Chinese stocks and bonds, while for insurance funds the figure was around 10 trillion yuan, and for trust companies approximately 2.2 trillion yuan.

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