China Life to further diversify foreign investments

27 March 2017   Category: News, Asia, China, Global   By Hui Ching-hoo

China Life Insurance, the largest insurer in China, is looking to further diversify its foreign investments within the confines of regulatory controls on such moves.

Speaking at a press conference on its 2016 financial results in Hong Kong on Friday (March 24), Zhao Lijun, vice president of China Life, said the company had made significant progress in overseas investments last year, with total offshore assets currently standing at approximately US$8.6 billion, up from $7.6 billion as at June 30, 2016.

Mr. Zhao said China Life pursues overseas investments in three ways: through external mandates – where it outsources offshore investments to external managers – which currently amounts to about $1.3 billion; direct investments in alternative assets such as real estate; and overseas private equity investments.  

Mr. Zhao added that the company has appointed an external asset manager to purchase H-share equities through the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, saying: “We’re looking into the Hong Kong stocks with high dividend payouts.”

“Although the tightening on capital outflow imposed by the Chinese government last year affected our overseas investment plan, we believe Chinese enterprises will have to expand their turf overseas in the long run,” he said. “The company already has a number of overseas projects in the pipeline. It will strictly follow the government’s policies to carry out the investments.” 

Mr. Zhao said the company would be active in projects including health- and pension-related programmes, infrastructure, and commercial properties, both in China and abroad. 

China Life’s net profit fell 44.9% year-on-year in 2016 to 19.13 billion RMB (US$2.77 billion), in line with market expectations. Its gross investment income was down 22.8% to 108.15 billion RMB.

The firm had approximately 2.45 trillion RMB of total investment assets at the end of 2016, an increase of 7.2% from the end of 2015. It raised its bond allocation to 45.63% of total assets from 43.44% the previous year. Term deposits dropped from 24.59% to 21.94%. Investments in stocks and funds (excluding money market funds), and financial products rose to 10.05% and 9.28%, respectively, from 9.34% and 7.44% in 2015.