What’s new: China’s financial regulators launched a pilot program to allow insurer-backed asset management companies to engage in asset-backed securities (ABS) and real estate investment trusts (REITs) to further diversify the market.
The first five companies joining the trial include China Life Asset Management Co. Ltd., Taikang Asset Management Co. Ltd., Pacific Asset Management Co. Ltd., PICC Asset Management Co. Ltd. and PingAn Asset Management Co. Ltd., according to the Shenzhen Stock Exchange.
The participation of insurer-backed asset management companies in ABS and REITs is an important measure to promote mutual development and synergy between insurance funds and the capital market, the Shenzhen bourse said.
Industry experts said the test will bolster interest among insurance companies to participate in ABS and help diversify the group of ABS investors. At the same time, insurer-backed asset management will further deepen its participation in REITs.
Background: A set of guidelines issued in March by the China Securities Regulatory Commission laid the regulatory groundwork for insurer-backed asset management to engage in ABS and REITs.
Previously, securities brokerages and their asset management subsidiaries were the main managers of ABS and REITs. Insurer-linked asset managers could invest only in newly offered REITs with limited access to the ABS market.
As of May, China listed 27 public REITs with a total market value of 90.6 billion yuan ($12.4 billion). More than 60 insurance companies have invested in REITs with more than 12 billion yuan through strategic placements and offline subscriptions, making them important institutional investors, public market data showed.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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