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Chinese regulator toughens rules on insurers' investments in stocks

China's insurance regulator is limiting the maximum share of insurers' investments in equities as a means of curbing aggressive moves by some unlisted players into stocks, the South China Morning Post reported Dec. 14.

The China Insurance Regulatory Commission will limit the maximum share of insurers' investments in equities to 30% of their total portfolio from the previous 40%, said Chen Wenhui, deputy chairman of the CIRC, in an interview with People's Daily.

The regulator will also implement other measures to regulate what is seen as aggressive share bidding by Chinese insurers. Insurers will not be allowed to invest more than 5% of their total assets in a single stock, compared to a previous limit of 10%.

The CIRC had raised the ceiling on equities investment to 40% from 30% in July 2015. However, recent comments from CIRC Chairman Xiang Junbo suggest a shift in the regulator's stance. China Securities Regulatory Commission Chairman Liu Shiyu also recently criticized leveraged stock buyers as "robbers".

The new rules also ban insurers from partnering with noninsurance companies to acquire listed companies or using clients' product investments for large equity purchases. Insurers must also seek approval from the CIRC before making any large equity investment.