(Yicai) April 9 -- China’s financial regulator will allow insurance companies to invest more of the funds they manage into the nation’s stock market, potentially unlocking about CNY471.2 billion (USD64.3 billion) to bolster share prices.

The National Financial Regulatory Administration has raised the allocation ceiling by 5 percentage points, so insurance funds can now invest from 10 percent to half of their total assets in the stock market, depending on their solvency ratio, it said in a notice yesterday.

The new ceiling could release about CNY471.2 billion in potential market inflows, Ge Yuxiang, chief non-banking sector analyst at Zhongtai Securities, calculated based on the third-quarter data of insurers with solvency ratios of 150 percent to 200 percent and 250 percent to 300 percent.

The top five contributors would be Ping An Insurance, Taiping Life Insurance, People's Insurance Company of China, China Post Life Insurance, and Sinatay Life Insurance, accounting for a total of more than CNY400 billion, Ge noted.

By lifting the allocation cap, the NFRA aims to broaden the investment avenues for insurance funds, channel more capital into the real economy, strengthen equity support for strategic emerging industries, and speed up the development of new, high-quality productive forces, it said.

The regulator also introduced two other supportive measures, one allowing insurers to invest more heavily in venture capital funds, and the other easing the rules on how much they can put into tax-deferred pension products.

A spokesperson for Ping An Insurance told Yicai that “the policy supports insurance firms in expanding equity allocation, enhancing the flexibility of industry asset allocation, improving the quality and efficiency of asset-liability matching, and strengthening operational stability.”

Given the insurance sector's total investment of around CNY4.4 trillion in equities and an average allocation ratio of 12 percent, the policy shift could release more than CNY100 billion of new funds into the market, according to a prediction made by Wanjia Asset Management.

After the release of the NFRA's notice, all five of the big insurers listed in the Chinese mainland voiced support for China’s capital markets and announced plans to boost investment. China Pacific Insurance, for example, said the Shanghai-based firm plans to buy back some of its own shares.

Share buybacks remove some of a publicly traded company's equity from the stock market, with the aim of bolstering the price.

Editor: Futura Costaglione