On July 27, 2010, the Beijing-based life insurer made additional investment of CNY 3 billion into funds. On the following day, domestic stock market rose sharply, with the Shanghai Composite Index closing up 2.26% at 2,638.66 points and the Shenzhen Component Index on the day closing up 2.45% at 10,825.17 points. As early as the middle of this May, actually, China Life had made CNY 20 billion worth of investments into the A-share market.
As for other insurers, they seemed not to take that aggressive action as China Life did. As the nation's second biggest insurance group, Ping An Insurance (Group) Company of China (601318.SH) over the past two weeks did not make any further investment in publicly traded shares. Another two New China Life and People's Insurance Company (Group) (PICC Group), both based in Beijing, only added less than CNY 1 billion stock investments in the period. These insurance institutions are understood to strengthen the risk control and beautify their interim reports to meet related regulatory requirement.
This May, when China Life made a large amount of investment into the A-share market, insiders disclosed that the insurer was optimistic about the performance of domestic stock market; but later, the Shanghai Composite Index that tracks Yuan-denominated A-shares and foreign-currency B-shares went down to 2,319.74 points, the lowest within this year. Despite this, China Life was still confident in the Chinese stock market and the fact is that the insurer has made the right decision.
As of March 31, 2010, China Life had total assets of CNY 1.28 trillion and its archrival Ping An had more assets of CNY 995.4 billion. This year, China Life shows strong interest in investment into commercial banks.
For instance, the CNY-15-billion additional share sale of Guangdong Development Bank (GDB) has been chased by four shareholders. These shareholders include Citigroup, China Life Insurance, CITIC Trust Co. and State Grid Corporation of China (SGCC). News said that each of them paid CNY 3 billion for the subscription. Lately, Beijing-based China Life as the biggest life insurer of the nation made CNY 4 billion investments into newly listed Agricultural Bank of China, thus becoming the biggest strategic buyer of the state lender's Yuan-denominated shares.
(USD 1 = CNY 6.78)
