China directs pension, insurance funds into nation’s A shares to anchor stock market

China’s financial regulators are channelling pension and insurance funds into the nation’s equities to establish medium and long-term holdings and stabilise Asia’s largest capital market.

Starting this year, 30 per cent of the annual insurance premium earned from new coverage policies will be put into yuan-denominated A shares, said Wu Qing, the chairman of the China Securities Regulatory Commission, during a press conference in Beijing.

Investments of A shares by pension funds must increase by 10 per cent every year over the next three years, he said.

The directives will deliver a much-needed jolt to the capital market, which had been beset with malaise over a lackluster economy, a prolonged property slump and tepid corporate earnings.

The CSI 300 index, which tracks the 300 largest stocks on the Shanghai and Shenzhen exchanges, jumped 1.1 per cent in early trading after Wu’s announcement.

Accompanying Wu at the press conference are several financial regulators, including Deputy Finance Minister Liao Min and PBOC official Zou Lan.