This story from the People’s Daily is encouraging. It says that China’s insurers have started putting money into the stock markets. According to the CIRC, the insurance regulator, "at the end of August, Chinese insurance companies held investment assets worth 1.05 trillion yuan (133 billion U.S. dollars), including 49.9 billion yuan of shares."
It would seem that the companies have a bit more faith in the market than they used to. Or perhaps they’re just under direct orders to put more money into the stock exchange. The government, after all, has been ferociously trying to get the markets off the ground, bring home star domestic companies who have forsaken them for New York or Hong Kong, and get those devilish foreigners to really start laying on the funds. The average Wall Street banker still considers China’s markets a joke. But serious people are paying attention, and are in for the long haul. Like UBS.
Of course, it’s not like the insurance companies have much choice. With policy sales going up and the population getting old, they need to make some good returns on their cash. They can’t just put it in the bank, as they’ll end up losing money after inflation. Recent purges in Shanghai have brought the legal status of investing pension funds in infrastucture projects into question. Historically the markets have not been a good bet. But things could be looking up…
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