Insurance firms get high-risk stock OK

China will allow insurance companies to invest in high growth and high risk stocks for the first time, the nation's insurance regulator announced on Tuesday, injecting fresh capital into the stock trading which will boost listed high-tech firms.

Insurance companies are allowed to invest in stocks of Growth Enterprise Board (GEM) or China's NASDAQ hosting high-tech, small-cap firms featuring high growth and high risks in Shenzhen Stock Market, China's Insurance Regulatory Commission said in a statement on Tuesday.

Currently insurers can invest up to 10 percent of their assets in the stock market and this is the first time that insurers are being specifically permitted to invest in high growth stocks.

Insurers can either invest directly or through asset management companies, however companies which are under investigation, have been punished within the past year or found to have financial pro-blems are not qualified to invest, according to the new rule.

Insurance companies must file with the insurance regulator and disclose if their holdings of GEM stocks exceed 5 percent of their investment assets, the rule stated.

The announcement came after 27 firms were given the green light for their IPOs between December 30, 2013, and Monday, the most numerous set of IPO approvals after a 13-month IPO freeze, the longest in A-share history. The majority of the 27 firms will land on GEM and the small and medium-sized board in Shenzhen.

Ernst & Young estimated that new listings could raise as much as 200 billion yuan in 2014. The intensive supply of stocks sent the benchmark index to a 5-month low on Monday.

Additional funds from the insurance companies is expected to stabilize the stock market amid IPO resumption, boost the shares of the high-tech firms and meanwhile generate higher investment returns for insurers, analysts say.

Two Chinese companies plan to raise a combined 1.02 billion yuan ($167.70 million) in their IPOs this week.

According to statements posted on the Shenzhen Stock Exchange website late on Monday, Guangdong Xinbao Electrical Appliances Holdings Co Ltd plans to issue 76 million shares priced at 10.5 yuan apiece, which would raise a total of approximately 798 million yuan.

Zhejiang Wolwo Bio-Pharmaceutical Co Ltd hopes to raise 217.21 million yuan by issuing 11 million new shares priced at 20.5 yuan per share.