China will allow full foreign ownership of insurance asset management companies, after its financial regulator released draft rules on Friday removing the 25% cap on ownership by foreign entities.
The rules issued by China Banking and Insurance Regulatory Commission (CBIRC) will allow foreign investors to raise their stakes in insurance asset managers to 100% and assume control, the South China Morning Post reported. The public consultation period on the rule change will run for about a month.
“The relaxation will offer the same treatment to both foreign and local investors who are shareholders of insurance asset management companies,” CBIRC said on its website. “This will help to attract more high-quality international insurance companies and asset management firms to participate in the mainland insurance asset management industry.”
This opens a huge market to international investors, as Chinese insurers’ assets were worth RMB18.7 trillion (US$2.9 trillion or SG$3.95 trillion) as of the third quarter. These assets are placed in bonds, stocks and properties. A total of 31 insurance asset managers have been present in the Chinese market since 2004, when they were first allowed to operate.
“For foreign asset managers, this is the natural next step to the relaxation of foreign ownership limits on securities companies that previously took place and further opens up China's financial markets,” said Angelina Ng, executive director for securities services at Capco. “Domestic investors can expect to see expanded investment options and opportunities to diversify their portfolios, while domestic asset managers are likely to be gearing up with competitive pricing, product and distribution methods innovation to increase stickiness of their products.”