Tortola Capital reports on the continued loosening of investment restrictions in China. The latest move is sure to have a big effect on the global economy, predicts Clayton Emerson, VP of Business Development at Tortola Capital. Last week, China’s insurance regulator announced that insurance companies can now buy triple-A-rated nonguaranteed bonds on the domestic interbank market.
The move will broaden the cash-rich firms’ investment channels and continue the development of the country’s relatively young corporate debt market. The move also will help finance China’s four trillion yuan ($585.8 billion) economic stimulus, analysts said. China has gradually been loosening restrictions on insurers’ investment in corporate bonds in recent years.
The widening investment channels will help satisfy increasing demand for corporate bonds by domestic insurers, whose premium income has been rising robustly. China’s insurance companies collected 1.022 trillion yuan in premiums from January through November last year, the state-run Xinhua news agency reported in December.