won approval to invest in foreign capital markets from the State Administration of Foreign Exchange, a first for a Chinese insurer, China Daily reported. SAFE approved a US$1.75bn investment quote, just shy of the US$1.8bn raised by the insurer's initial public offering in Hong Kong last year. It is the only Chinese insurer so far, out of 10 qualified, to have requested an investment quota, since new rules last August allowing insurers to invest their forex holdings overseas.
Other players seem certain to follow as insurers had been pressing for access to overseas markets to boost investment yields. Until last August Chinese insurers had been restricted to bank deposits, bonds and securities investment funds, putting a dampener on yields while giving regulators less to worry about.
Access to overseas markets could see social security funds flowing offshore in search of better returns to ease pension shortfalls now that they are being put into the hands of commercial fund managers. Shenzhen-based China Merchants Fund Management (CMFM), 30% owned by Amsterdam-based ING Group, reportedly began deploying National Social Security Fund (NSSF) cash, making it the first foreign joint-venture to be awarded an investment mandate by China's RMB150bn (US$180m) social security fund, the South China Morning Post reported.
Its initial allotment, according to the newspaper, was RMB1.2bn. The NSSF, which receives government allocations and proceeds from sales of designated stateowned assets, was set up in 2000 to help provinces fill funding gaps in social security programs.
Meanwhile, Shanghai-based Tai Ping Pension expects to raise RMB3bn (US$36.44m) to manage in its first operating year, according to the Post, citing shareholder China Insurance (Holdings). So far it has rustled up RMB20m in pension funds – while its national operating license awaits a few more chops to become legal. One of China's two new supplementary pension providers, Tai Ping has started working China's rust-belt northeast region, where it serves employees in companies operating supplementary voluntary pension schemes.