Wednesday, August 29, 2012

China Life Insurance will investment in real estate and infrastructure sector 2012-2013

China Life Insurance will investment in real estate and infrastructure sector 2012-2013 : China Life Insurance Co. (2628.HK), the world's largest life insurer by market value, will boost its investment in the real estate sector and major infrastructure projects for higher returns, Chairman Yang Mingsheng said Wednesday after the company reported a 26% drop in first-half net profit.

Speaking at a news briefing in Hong Kong, Mr. Yang said that China Life would boost its investment in the real estate sector in late 2012 and 2013. The insurer will also step up infrastructure investment, he said, although he didn't give a time frame.

The key to broadening our investment channels is to enter into the real economy, especially the real estate sector and major infrastructure construction led by the government," he said.

Mr. Yang added that the insurer's return on investment in the first half of the year was hurt by the sluggish stock markets and less than robust insurance premium income.

The chairman said that investment in real estate could provide as much as a 6% investment return while investment in the stock market was producing less than 1% and the bond market about 2%.

The company on Tuesday reported a 26% drop in first-half net profit, citing lower premium income and higher asset impairments arising from sluggish domestic capital markets.

Vice President Liu Jiade told the briefing that China Life had made sufficient provisions for impairment losses.

Mr. Liu also said that China's A-share market provides opportunities for investment as the average price-to-equity ratio had fallen to less than 14 times. He added that the economic slowdown will pressure A-share prices in the second half of the year.

Chairman Yang said the insurer will face increasing competition from banks' wealth management products as well as banks' bigger presence in the industry as they acquire insurers.

Meanwhile, he said the insurer has yet to make a decision on a possible increase in its stake in China Guangfa Bank. China Life has a 20% stake in China Guangfa, according to the bank's website.

According to a report in Hong Kong's South China Morning Post on Wednesday, China Life has entered into talks with some investment agencies of Guangdong province, which plan to sell some of their holdings in China Guangfa Bank. The report cited people familiar with the situation.

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