China Life Insurance Co Ltd, the country's top life insurer, said it plans to invest more in a flagging domestic stock market after a sharp drop this year made share valuations more attractive.

China Life will also increase its investments in corporate bonds, especially those issued by major Chinese enterprises, to seek stable returns, Wang Junhui, vice-president of the group's asset management unit, said yesterday.

"After the sharp market declines this year, we believe the market looks very attractive already if you look at it in a mid-term or long-term perspective," he said.

The company had cut its equity investments to 13.3 percent of its total investment assets as of the end of June from 23 percent six months earlier. Wang said the portion of equities in its portfolio would rise, though he declined to say by how much.

The insurer intends to participate in more private equity deals to diversify its portfolio, Wang said, adding China Life had secured some potential projects. The company, however, needs approvals from the government.

China's benchmark Shanghai Composite Index is down nearly two-thirds from last October's record peak due to worries about slowing corporate earnings growth and new supplies of equity. The index had slipped on Monday to its lowest in 21 months but closed up 0.11 percent on Tuesday.

This year's stock market tumble has hurt investment income at Chinese insurers, although China Life's 32 percent drop in first-half net profit was not as bad as the market had forecast.

To support earnings growth, the insurer is keen to expand into rural markets while seeking investment opportunities in overseas markets, Chairman Yang Chao said on Tuesday.

Reuters

(HK Edition 09/10/2008 page2)