China has asked the country’s largest insurance firms to purchase bonds offloaded by retail investors, Bloomberg reported citing people privy to the development.
The move comes as investors increasingly exit fixed-income investments and injected funds into stocks as market became more positive after the government easing COVID-19 curbs.
Insurers were particularly urged to buy bonds sold by wealth management divisions at banks.
The move is aimed at evading further market volatility, the people said.
Insurers whose investment offerings are less affected by short-term redemptions have already listened to the call. They bought bonds on a positive outlook prior to the current guidance.
China Life Insurance and Ping An Insurance Group are the country’s biggest insurers. The asset management units of these two firms oversee $1.3tn.
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By GlobalDataThe country’s benchmark bond yields grew the most in six years on 14 November as relaxation of Covid restrictions lured investors into stocks.
Last month, large withdrawals from bond-backed wealth offerings triggered by turbulence also compelled regulators to call on banks to report their liquidity status.
Recent moves in China’s insurance market
Last month, Fosun International appointed Deutsche Bank to advise on a potential sale of its stake in Hong Kong domiciled Peak Re.
Earlier this year, HSBC Holdings insurance unit global CEO Greg Hingston unveiled plans for China expansion.
Hingston deemed Hong Kong “massively important” for the lender.
