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Insurance companies are now able to invest in China's real estate market. But analysts say that since the capital amount is limited, so is its impact on the market.
Insurers can invest in projects with clear property rights and concentrated management rights, says the China Insurance Regulatory Commission. However, companies are not allowed to invest in commercial property or be directly involved in real estate development. Another regulation is that the investment amount in this sector cannot exceed 10 percent of its total assets by the end of its last quarter.
According to the statement, insurance companies' investment may total around 400 billion yuan, with approximately 200 billion yuan invested in the beginning stages. Analysts say the relatively small amount will not affect the market much.
Wang Xiaogang, Securities Analyst of Orient Securities said "I think the influence is limited. Investment in the property market is usually counted by trillions. Now, insurance companies may only invest around 200 billion yuan in the market. That's relatively small. But it may have influence on regional markets."
Analysts also point out that the regulations are aimed at diversifying risks.
China has gradually loosened restrictions on insurance companies' investment portfolios in recent years. Last month, insurers were able to invest in a wider variety of shares and bonds.