New products to help fend off liquidity risks of listed firms

China announced a decision on Thursday to allow insurance asset managers to set up special products to invest in listed companies, as part of the measures taken by the authorities to mitigate the liquidity risks of listed companies which have borrowed money using shares as collateral.

In a notice, the China Banking and Insurance Regulatory Commission permitted insurance asset management companies to set up special products, and the investment targets of these products include shares of listed companies, publicly issued bonds of listed companies and their shareholders, and non-publicly issued exchangeable bonds of the shareholders of listed companies.

The major investors in the special products will be insurance companies, institutional investors such as the National Council for Social Security Fund, and the asset management products of financial institutions, according to the banking and insurance regulator.