More institutions allowed to trade stocks

China's securities regulators opened the country's equity market to more institutional investors Friday and may soon open the door further as part of their push to revive the ailing equity market, say experts.

Beginning from the end of last week, domestic firms offering trust products and insurance asset management services can open trading accounts in the securities market, according to announcements released on the official website of China Securities Depository and Clearing Corporation (CSDCC) Friday. Meanwhile, the China Securities Regulatory Commission and the China Banking Regulatory Commission are considering permitting banks to expand the investment scope of their wealth management products to the stock market, according to a report from the China Securities Journal, citing an insider from the CSDCC.

Prior to these announcements, insurance asset management companies and wealth management services were barred from the stock market and trust companies had been blocked from creating A-share accounts since 2009.

The regulators' goal in this move seems to be cultivating a stronger team of institutional investors to promote the development of the domestic stock market, which has long been dominated by small individual investors with limited trading expertise, Dong Dengxin, director of the Financial Securities Institute at Wuhan University of Science and Technology, told the Global Times.

Also, given the current bearish climate at the country's stock exchanges, regulators may also be trying to bring more capital into the market via these capital-rich investors, according to Dong.

The assets of Chinese trust funds, insurance asset managers and wealth management product providers have surged sharply in recent years.

According to a report by the China Trustee Association, the total value of trust assets in the country has grown by roughly 1 trillion yuan ($157 billion) annually since 2008 to hit 5.5 trillion yuan in the first half of 2012. Meanwhile, insurance asset managers held 6.78 trillion yuan in assets as of June 30, up 13.3 percent from the start of the year, according to statistics from the China Insurance Regulatory Commission. Domestic banks have also issued 12.14 trillion yuan worth of wealth management products in the first six months, up 43 percent year-on-year, data from a report issued by the research center of trust and wealth management products at Southwestern University of Finance and Economics show.

Fan Jie, a trust analyst from Cnbenefit, a wealth management consultancy, voiced doubts about whether the regulatory maneuvers would have any significant impact on the equity market in the near term.