CHINA BANKING AND FINANCE NEWSLETTER
Vol. 4, No. 8 - July 3, 2003
TOPICS THIS ISSUE:
- Restrictions On Insurers Lifted
- Inter-bank Forex Trade Surges In May
- Sino-foreign Joint Venture Insurer To Sell Equities
- One-stop Property Services Available For Overseas Buyers
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Restrictions On Insurers Lifted
A new regulation is to be adopted later this year that will remove the restriction on insurers that they cannot invest their premiums in the Chinese equity market.
The move is expected to improve the performance of the insurance sector at it will give them more freedom to invest funds and generate greater returns from capital markets. Currently, insurance company premiums can only be kept in bank deposit accounts or used to acquire treasury bonds.
The new regulation will also lift restrictions on China's insurance companies investing their funds in the stock market. At present they are only allowed to invest in an indirect way, by buying into securities funds, which are managed by fund management firms.
Senior officials with a number of key government departments, including China Insurance Regulatory Commission ("CIRC"), China Securities Regulatory Commission ("CSRC") and State Development and Reform Commission ("SDRC"), have held a number of meetings to work out the new rules.
The draft regulation still needs approval from the State Council, China's cabinet, before being put into practice.
It is believed that three plans are under consideration, which could constitute the main part of the rules. The three plans include allowing insurers to set up joint venture fund management firms with other financial institutions, entrusting their funds to fund management companies and increasing the portfolio proportion invested in the stock market.
Source: Business Weekly
Inter-bank Forex Trade Surges In May
China's inter-bank foreign exchange transactions volume reached US$10.44 billion in May, with the daily trade volume hitting US$549 million.
The daily transaction volume was 36 percent higher than the figure for the previous month and 63.7 percent higher than the figure for the same month last year, according to statistics from the Shanghai-based China Foreign Exchange Center.
The total trade volume included 10.202 billion US dollars, 1.091 billion Hong Kong dollars, 37 million euros and 6.422 billion Japanese yen.
The weighted average exchange rate of the US dollar closed at 8.2768 yuan at the end of May, with that of the HK dollar and euro standing at 1.0611 yuan and 9.8624 yuan respectively. The yuan-yen rate closed at 6.9904 at the end of the month.
Source:Xinhuanet.com
Sino-foreign Joint Venture Insurer To Sell Equities
The local partner of Shanghai-based Allianz Dazhong Life Insurance is to sell its holdings in the company ahead of plans to list on the domestic stock market.
Founded in January 1999, the Allianz Dazhong Life Insurance Co. Ltd. was a joint venture between Dazhong Insurance Co., Ltd. based in Shanghai and the Allianz, a Fortune 500 company from Germany, with a registered capital of 200 million yuan (US$24.1 million). The German partner owned 51 percent of the stake, with the Chinese side taking the remaining 49 percent.
The sale will facilitate the Chinese assurance firm plan to gain a listing on the domestic capital market.
In late May, Dazhong Insurance Co. Ltd. obtained a letter of supervision, a necessary document for stock market listing, signed by China Insurance Regulatory Commission ("CIRC"), the industry watchdog.
Zhou Renyong, a senior Dazhong official, said the company was ready to become the first property insurance company listed on the domestic market.
Based on international practice, a life assurance firm will normally experience seven years of losses after starting up.
Despite triple-digital growth in premium revenue, Allianz Dazhong has continued to incur losses, which may affect the planned listing and post-listing re-financing. As a result, Dazhong decided to give up its holdings in the Sino- German joint venture.
Source: China Daily
One-stop Property Services Available For Overseas Buyers
The Hongkong and Shanghai Banking Corp Ltd. has teamed up with DTZ Debenham Tie Leung to provide one-stop property consulting and mortgage services for overseas investors in Shanghai.
Under the agreement, the two parties will provide overseas homebuyers with such services as property purchase, US dollar mortgage loans, property leasing, rental collection and related property management.
Meanwhile, HSBC, which focused on extending loans to foreign property developers operating in Shanghai, said the deal is a step to expand its real estate-related loan business to individual house buyers.
China Construction Bank's local branch, the biggest housing loan lender in the city, has eased requirements for overseas customers to apply for renminbi housing loans since last year.
Starting last May, an expatriate who has a job in Shanghai can borrow up to 80 percent, up from 60 percent, of an apartment's price from CCB, the same level enjoyed by local people.
Source: Shanghai Daily
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