New plan to make good use of insurance funds

The central authorities issued a plan on Wednesday to promote the entry of medium- and long-term funds into the stock market. The plan mentions specific rules for assessing the performance of State-owned insurance companies over a period longer than three years.

The plan can guide insurance companies to pay more attention to long-term investment returns, and avoid short-term market fluctuations and risks caused by the excessive pursuit of short-term returns. Insurance companies are also encouraged to actively explore long-term investment opportunities, help to boost technological and industrial innovation, and achieve the steady growth of investment income.

Currently, the proportion of insurance funds invested in stocks is relatively low, mainly because the existing performance assessment mechanism makes it difficult to bear highly volatile investments. With the long-term assessment mechanism, a large amount of insurance funds will flow into the stock market.

The plan also clarifies the long-cycle performance assessment mechanism for the national social security fund for more than five years and the basic pension fund for more than three years. Compared with insurance companies and social security funds, the guidance for three-year or more long-cycle performance assessment of enterprise annuity funds is also being drafted, all of which are expected to have a positive impact on the domestic financial market.

The plan also reduces the threshold for commercial insurance funds and basic pension funds to enter the market. This adjustment helps to clear obstacles in the way of medium- and long-term funds entering the market, enhances market liquidity, increases the proportion of institutional investors, improves the investor structure, and promotes long-term investment.

By promoting the implementation of private securities investment fund operation rules, the plan is expected to enhance market stability and risk resistance, reduce market volatility, and stabilize market expectations.

- 21st Century Business Herald