China Unveils Plan to Boost Stock Market by Channeling Insurance Funds

China is pushing to bolster its lagging stock market by encouraging large state insurers and commercial insurance funds to invest more heavily in A-shares, Reuters reported. This move, announced Wednesday, aims to counter investor anxieties stemming from ongoing US-China trade tensions.

The plan, jointly released by six financial regulators, mandates that major state-owned insurance companies increase both the absolute value and proportion of their investments in mainland-listed Chinese stocks and equity funds. This directive aims to infuse fresh capital into the domestic market, attempting to offset the recent downturn triggered by concerns over potential US tariffs on Chinese goods.

To encourage this shift, regulators will adopt a long-term performance evaluation framework for state-owned insurers. This framework will weigh the annual return on equity at only 30%, prioritizing longer-term performance (three to five years) for at least 60% of the evaluation. This approach aims to incentivize patient investments and reduce short-term profit-driven trading.

The plan's scope extends beyond state-owned entities. The National Social Security Fund and pension funds will also see increased investments in the stock market. Additionally, the initiative will guide mutual fund managers to steadily increase both the size and proportion of equity funds under their management.

This latest measure builds upon a series of initiatives launched by Chinese authorities to bolster investor confidence and revive the stock market. These efforts include swap and relending schemes totaling 800 billion yuan aimed at facilitating stock purchases. The overall goal is to foster a more stable and resilient capital market environment, countering the current market pessimism.