The investor base of the People’s Republic of China (PRC) comprises state-run financial institutions, pension/insurance funds, licensed foreign financial institutions, small-to-medium scale financial institutions, and retail investors.
General Investors
Major investors are state-owned commercial banks, share-holding commercial banks, and nonbank financial institutions, including securities companies, credit cooperatives, securities investment funds, and cooperatives. Other investors include small- and medium-sized financial institutions, corporate enterprises, foreign financial institutions holding Qualified Foreign Institutional Investor (QFII) licenses, and retail investors. A complete list of authorized QFIIs is available through the link below.
Asset Pooling Industries
Pension Funds
Established in 2000, Social Security Fund (SSF) assets reached CNY171.1 billion in 2004. The National Insurance Law mandates that at least 50% of SSF funds are invested in bank deposits and government bonds, 40% in equities, and 10% in corporate bonds. SSF manages a portion of its Treasury bond investments through the following government-appointed asset management companies: Changsheng Fund Management, China Asset Management, China Southern Fund Management, Harvest Fund Management, and Penghua Fund Management.
Insurance Companies
The People’s Republic of China (PRC) had a limited number of insurance companies as of 2009: 61 local insurance companies and 43 foreign-invested companies.
In March 2009, the China Insurance Regulatory Commission (CIRC) said that it would permit
insurers in the life and the non-life sectors to invest in paper backed by infrastructure projects, with life insurers and non-life insurers being allowed to invest 6% and 4% of their assets, respectively, in such instruments. To make these investments, insurers would be required to have maintained a solvency ratio above 120% in the previous two years. CIRC also issued regulations allowing smaller insurance companies to invest in stocks directly, subject to meeting solvency ratio requirements. Previously, such insurers could make equity investments only through asset management companies.
In April 2009, CIRC issued regulations expanding the range of bonds insurers can invest in. The
regulations allow insurers to invest in bonds issued by local governments and more notably, in
unsecured bonds–corporate bonds without third party or bank guarantees. Insurers are allowed to
invest 15% of their assets in these instruments.
In October 2009, CIRC raised the cap on PRC insurers’ investments in corporate bonds from 30% of their assets to 40%. However, insurers are limited to investing in bonds of large state-owned enterprises; Hong Kong, China-listed “red chips”; and companies with “H-share” issuance. Furthermore, the bonds eligible for investment must be rated BBB and above.
Asset Management Companies
The PRC has a growing mutual fund industry: 54 closed-end and 142 open-end funds at the end of 2005. The Securities Investment Fund Law requires that 80% of fund assets be invested in equity and bond markets, and at least 20% invested in treasury bonds. There was CNY379.1 billion in funds under management at end of 2005. The PRC's largest fund managers are China Southern Fund Management, Hua’an Fund Management, and China Asset Management.