China's insurance funds reaped a 2.5 percent earnings rate on their investments in the first half of the year, up 0.86 percentage points year on year.

The China Insurance Regulatory Commission (CIRC) said it was the best performance in recent years. Analysts predict that returns on insurance funds investments for the year will reach 4 percent.

Official statistics show China's insurers have funds worth 1.58 trillion yuan (197 billion U.S. dollars) available for investment, an increase of 12.17 percent on their position at the beginning of the year.

Cao Deyun, an official with the CIRC, said insurance funds' investment earnings had grown steadily in the first half of the year.

In the first six months, the country's insurers invested 865.78 billion yuan in bonds and 43.47 billion yuan in shares, up 16.67 percent and 173.62 percent from the beginning of the year, with returns exceeding 2 percent and 10 percent respectively. Returns on securities were more than 9 percent, but the volume of security fund investments, at 78.27 billion yuan, was down 29.3 percent on the beginning of the year.

Cao said the central bank will raise the reserve ratio in August and that this will result in reduced currency liquidity and generate market price movements. Given this scenario,insurers should keep a close eye on capital flows and on the macroeconomic picture so that they can modulate their investment profile.

Source: Xinhua