SHANGHAI Dec 1 Chinese insurers may boost
outbound investment by about $100 billion over the next three
years, as they seek to diversify risks through buying more
overseas securities, private equity and real estate, BNP Paribas
said on Thursday, citing a survey.
This reflects insurers' long-term strategy, and is driven
mainly by a desire to deliver stable and sustainable returns,
rather than a response to a weakening yuan, said Philippe
Benoit, head of Asia Pacific at BNP Paribas securities services.
"These are long-term investment decisions ... not based on
what you're reading in the press," he said, adding that hedging
yuan exposure played a minor role in the insurers'
Chinese insurers are allowed to invest up to 15 percent of
their assets overseas, but currently, just 2 percent has been
allocated abroad, suggesting "it's a long-term trend".
The survey was published at a time when Beijing is stepping
up efforts to stem capital outflows that adds depreciation
pressure on the yuan. The Chinese currency has fallen to more
than eight-year lows against a surging U.S. dollar.
This week, China intensified scrutiny over outbound
investment, and also tightened rules on overseas yuan loans in a
battle to curb outflows.
Benoit said Chinese insurers, who have "a long-term
mindset", are still in the early stages of foreign investing,
and such an aspiration will be unlikely deterred by short-term
Acquisitive Chinese insurers including Ping An Insurance
Group of China and Anbang Insurance Group
have been shopping overseas for the past few years,
snapping up foreign companies and properties.
At the end of 2015, Chinese insurers held overseas assets
worth $36.7 billion, a 51 percent jump from a year earlier, but
still accounted for just 2 percent of industry assets totalling
12 trillion yuan ($1.74 trillion).
BNP Paribas' estimate was based on a recent survey with
China's top 20 insurers, which showed that over half of the
respondents plan to increase the percentage of their assets
overseas to 5-10 percent, according to the French bank.
The United States and Europe are the most popular investment
destinations for Chinese insurers, partly because of the size
and the depth of the two markets, according to the survey.
Most insurers participating in the survey say they prefer to
invest in foreign stocks, bonds, private equity and real estate.
Chinese insurers face a series of challenges overseas,
including identifying investment opportunities and managing
risks, creating business opportunities for Western banks such as
BNP Paribas, which can act as custodian and advisor for Chinese
insurers, Benoit said.
($1 = 6.8929 Chinese yuan renminbi)
(Editing by David Evans)