The Paper Journalist Ji Simin Hu Zhiting
On November 13, the China Banking Regulatory Commission issued the "Notice on Matters Concerning Financial Equity Investment of Insurance Funds" (hereinafter referred to as the "Notice").
On the one hand, the China Banking and Insurance Regulatory Commission has liberalized industry restrictions on financial equity investment in insurance capital. On the other hand, it has also listed a negative list to draw a red line for investment targets.
Among them, it is clarified that when insurance funds carry out financial equity investment, the target enterprise of the investment shall not directly engage in real estate development and construction, including the development or sale of commercial residential buildings.
Specifically, the core content of the "Notice" is to remove industry restrictions on financial equity investment of insurance funds.
But this does not mean that insurance companies can arbitrarily choose investment targets. The negative list has 10 situations that clearly draw a red line for financial equity investment of insurance funds.
The financial equity investment referred to in the "Notice" refers to insurance group (holding) companies, insurance companies and insurance asset management companies (collectively referred to as insurance institutions) that invest and hold equity in unlisted companies in the name of investors, and are According to the relevant provisions of the accounting standards, insurance institutions and their related parties do not constitute direct equity investment activities that control or jointly control the enterprise.
Zhang Bo, Dean of 58 Anju Guest House Property Research Institute, believes that the "Notice" on the investment of insurance funds in real estate is in line with the overall regulatory objectives of financial risk supervision in the real estate market. This phenomenon is not uncommon, and the hidden risks arising from it cannot be ignored. Therefore, this policy has undoubtedly strengthened the permeability of capital supervision.
"On the one hand, there are not many unlisted companies among the TOP50 real estate companies in the current real estate industry. Unlisted companies are relatively risky. On the other hand, the state invests in insurance funds in some high-risk assets, especially the real estate industry. Making clear restrictive requirements also represents that insurance capital is further strict with real estate investment." said Jiang Han, a senior researcher at Pangu Think Tank.
Zhang Bo believes that under high pressures such as the "three red lines", the demand for "debt-to-equity swap" financing has increased.
At present, the above-mentioned prohibitive regulations made by the regulatory authorities are mainly due to the overall control of the bond financing of real estate companies, which has led to the increase of equity financing by real estate companies, and equity financing also has certain risks. Insurance funds have high requirements for risk control. A large number of direct real estate development is not conducive to its stability and safety.
"A large part of the source of insurance funds is premiums paid by the people, which have public attributes, and the cost of funds is also very low. In order to prevent systemic risks from causing damage to insurance premiums, the financial investment of insurance funds was previously concentrated on Pensions and debt-based bonds can maintain and increase the value of insurance funds. This time, after the negative list is drawn, the scope of investment of insurance funds is expanded, which can enhance the ability of insurance funds to serve the real economy." said Li Yujia, chief researcher of the Guangdong Housing Policy Research Center .
It is worth mentioning that the real estate industry has always been favored by insurance funds due to its low valuation and high yield.
According to a report released by Crane Real Estate Research, among the top 50 real estate companies in the first half of 2020, more than one-third of the top ten shareholders of real estate companies have insurance funds.
Among them, Ping An of China and China Life have a relatively large number of TOP50 real estate companies, especially Ping An, which currently ranks among the second largest shareholders of Country Garden, CIFI Holdings, China Jinmao, and China Fortune Land Development.
The report shows that the country’s regulatory concept of “no speculation in housing and housing” remains unchanged, and insurance funds enter the real estate industry, mainly in equity and debt investments, and funds will not flow directly to the housing market.
With regard to the entry of insurance equity assets into houses, on the one hand, with the explosive growth of insurance premiums in recent years, insurance funds need to find investment channels that bring stable returns to them. The expected return rate is high, the risk is relatively small, and the growth is strong. The industry will be favored, while insurance capital favors value-based listed companies with stable performance to obtain long-term dividends and stock price growth.
Zhang Bo pointed out that the "Notice" did not put forward corresponding requirements for investment in listed companies of real estate companies, and the regulations currently prohibit investment in unlisted companies.
To a certain extent, this may aggravate insurance capital to move closer to listed real estate companies.
However, it is worth noting that the listed real estate companies do not mean that their current financial risk level is at a relatively low level. In the future, it is not ruled out that the capital supervision of listed real estate companies may be further regulated and upgraded through the Securities Regulatory Commission and other departments.