Chinese Insurer Ping An to Tap Offshore RMB

Chinese insurance group Ping An, the country’s second-largest insurer by premiums, aims to tap into the billions of renminbi (RMB) sitting in Hong Kong and invest the funds in mainland capital markets under China’s RMB-repatriation programme.

Ping An Insurance has applied for a licence and investment quota under the country’s renminbi qualified foreign institutional investor (RQFII) programme through its asset-management unit in Hong Kong, Ping An of China Asset Management Hong Kong,  which had 27bn Hong Kong dollars (HKD) in assets under management at the end of 2011,

“Once we get the [license and quota] approvals, we’ll consider issuing products and we’ll be able to attract yuan [ raised] in Hong Kong to invest in the mainland markets,” said Timothy Chan, the insurer’s chief investment officer (CIO), who was quoted in the
Wall Street Journal
.

Chan did not say how large a quota the company hopes to secure, and did not offer details about the deployment of client funds in China’s stock or bond markets. However, he said investors might be more interested in using RMB if China’s bond market were more developed.

“Without a comprehensive bond market, RMB holders won’t see the incentive to hold on to the currency,” he said, adding that an improved credit rating system is also needed for the fixed-income market to thrive.

Chan added that Ping An’s investment operations plan to start trading Chinese stock index futures in the near future, on receipt of regulatory approval. Stock index futures would help Ping An in hedging against potential risks from its investments in mainland China.

“We’ve sent an application to the regulators already and hopefully we’ll get the approval soon. We’ve been participating in the simulation trading offered by the China Financial Futures Exchange [CFFEX] for more than a year, so we’re ready when we can do it,” he told the
WSJ
.

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