保险公司转向股市

China's insurance companies have become more active in the stock markets in recent months. Dairy giant Yili halted trade last week after Sunshine Insurance lifted its stake in the company. That's just the latest in a series of moves by insurers to bolster equity holdings. Why the sudden enthusiasm?

Inner Mongolia Yili Industrial Group is China's biggest dairy company and industry insiders say its outstanding performance in recent years aroused investment interest from Sunshine Insurance, an company that is not short of cash. After recording a 63 percent profit increase in 2015, it has increased its holding in Yili to 5 percent, making it Yili's third biggest shareholder.

"After years of development, insurance companies have seen a continuing increase in premium fees. Under China's economic restructure, interest rates have continued to decline. As the amount of high quality assets has decreased, insurance companies with huge amounts of capital are seeking good assets in the stock markets. China's only has a few well known dairy companies -- Bright Dairy and Food, Mengniu Dairy and Yili. Yili is largest among them. Sunshine Insurance has noticed Yili's developing trend and its leading position in the industry," said Cai Junyi, chief analyst of SH Securities.

Sunshine is not the first insurance company that has looked to the capital market. Foresea Life Insurance, which belongs to Baoneng Group, increased its holdings of traditional Chinese medicine producer Dongeejiao earlier this year. First half financial reports showed that almost a hundred insurance companies have invested in 612 listed firms in the first half of 2016.

"The biggest characteristic of insurance companies is that they get premiums up front from customers , and can make investments right away. In China's reforming and opening process, we've seen insurance companies put their money into infrastructure projects, high-yield bonds and etc. At that time, it was not necessary for them to look to the capital market. But as the economic structure is changing and the growth is going downward, insurers' ability to acquire good assets is weakening. So insurance companies prefers fixed income investment. And if they have the extra cash and are not satisfied with fixed income returns, they will turn to equirity investments with high dividends," Cai said.

The high-speed development of China's insurance industry has also provided more capital for companies to make investments in the stock markets. Data shows that four listed insurance companies China Life, China Pacific, Ping'an and New China Life received a total of 918 billion yuan in premiums from January to August this year, a jump of 19 percent year-on-year.