As if that were not enough, from Beijing they seem to throw more gasoline on the fire of the already agitated gold market, whose reference price already exceeds US $ 2,900 the ounce, accumulating more than US $ 300 rise in what It goes of the year. It happens that after transcending certain rumors days ago, from the Chinese capital, it has been confirmed that not only The Popular Bank of China, after a half -year pause, resumed official gold purchasesbut, in the midst of the current economic agitation at the national level and the threats of a trade war at the geopolitical level, Beijing launched a pilot program that allows Chinese insurers to buy gold for the first time. This initiative could release billions of dollars of investment in precious metal, around US $ 28,000 million, according to private estimates, thus adding more impulse to a record rally that reached a new maximum above US $ S2.900.
According to the Weixin Media Network, on February 5, in order to expand the channels of using insurance funds, optimize the allocation structure of these assets and promote that insurance companies improve their level of asset management and asset management and liabilities, the financial regulation administration issued the “Notice about the pilot program of insurance funds that invest in the gold business”. The pilot program of insurance funds that invest in the gold business will be carried out from the date of issuance of the aforementioned “notice”. The Bloomberg agency also echoed the news and reported that ten insurance companies, including Picc Property & Casualty and China Life Insurancetwo of the largest in China, can invest up to 1% of their linges assets, in a program that entered into force last Friday. That would translate into potential funds of 200,000 million yuan (about US $ 28,000 million), said Minsheng Securities investment bank in an investor note.
Policy change: Insurance allowed to invest in gold
The change of policy in China could be a sign that the authorities recognize the shortage of investment options in the largest economy of Asia and the need for alternatives in the midst of a real estate crisis and an economic deceleration, they pointed out from the US agency. “Insurance companies lack options for medium and long term assets with stable yields”Guotai Junan Securities led by Liu Xinqi said in a note, although the ingots usually do not offer that.
Anyway, policy change makes gold the first basic product in which Chinese insurers have explicitly allowed to invest. It is worth noting that, China has restricted that insurance funds take positions in assets without “stable cash returns” and limit the amount they can invest in bonds and actions.
For its part, for the analysts of the Minsheng Bank, this move seems to replicate what the US himself did in the ’80s when the country was with the almost desperate need to replace its manufacturing industry, which was weakening, as an economic engine, Especially after the ’70s, on that occasion the Government liberalized the property of shares of all financial industries, deregulating in practice its property. The result was a booming economy and an extension of the property of shares such as investment vehicles. They explain that China is replicating the structure of the US market, but liberalizing and promoting gold tenure, the most sure investment asset on the planet. Culturally see the result of excessive financing, especially with actions, which can generate disparity of wealth and bubble creation. China is doing the same, but with gold. China is being financed, just as Eeuu did, but with more reliable and less volatile assets.
The 10 companies in the pilot program
The truth is that China launched the pilot program of insurance funds that invest in the gold business, and 10 insurance companies have participated in the pilot program. What are the insurers? The first group of 10 pilot projects has been identified, of which the main insurance companies will benefit, among the participants are Picc Property and Casualty Insurance, China Life, China Taiping Life, China Export & Credit Insurance Corporation, Ping An Property & Casualty Insurance, Ping An Life, China Taiping Property and Casualty Insurance, China Taiping Life Insurance, Taikang Life Insurance and New China Life Life Life . From China they consider that the pilot project mainly involves large and well established insurers with strong investment and research capabilities, and insurance companies that are quoted in the stock market are expected to benefit directly, with an improved investment stability and a return potential In the long term.
The 10 pilot insurers together manage approximately 19.95 billion yuan in total assets. With a regulatory investment limit set at 1% of total assets, the estimated size of gold investment is currently in 199.5 billion yuan, approaching 200,000 million yuan. This level of allocation could influence supply, demand and gold prices, already measure that the pilot project is extended and the total assets of the insurers grow, the investments in gold and their impact on the market are expected to increase.
World Metal Market analysts highlight that the 10 participating insurers are industry leaders with established investment and risk management capabilities, and their advantage of pioneers in gold investment allows them to accumulate experience and maximize long -term benefits, by What is recommended to focus on China Pacific Insurance, New China Life Insurance, Ping An Insurance, China Life and China Property Insurance.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
