Chinese insurance companies will soon be allowed to invest in equities in overseas markets, a senior official of the China Insurance Regulatory Commission (CIRC) said yesterday.

The move is part of the government's efforts to "deregulate the sector step by step", said Sun Jianyong, director of the insurance fund management regulatory department of the CIRC, at a derivates forum in Beijing.

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The regulator will initially allow insurers to invest in mature stock markets such as London and New York this year.

"The long-awaited new rules on insurers' overseas investments will be issued in one to two months," Sun said.

The CIRC published the draft rules, designed to broaden insurers' investment channels and help boost investment returns, in December to seek public opinion on the subject.

The government is trying to deregulate the insurance sector step by step. Yang Xi

Under the new rules, insurers will be allowed to invest in money market and fixed-return products, stocks, options, mutual funds and derivatives abroad.

The rules will allow insurers to invest up to 15 percent of their total assets in the overseas market. As the total assets of China's insurance sector stood at 1.97 trillion yuan by the end of last year, around 300 billion yuan can be invested overseas.

The government has launched a slew of policies to broaden the investment channels of insurers, such as allowing them to pour money into infrastructure projects and buy stakes in commercial banks.

"There will be concrete progress this year toward letting insurers set up fund management companies," Sun said.

The China Banking Regulatory Commission (CBRC) is also working to cooperate with regulators of other markets to allow commercial banks, under the qualified domestic institutional investors (QDIIs) program, invest money on behalf of their clients in overseas stock markets, Huang Wei, a CBRC official said at the forum.

Last month, the CBRC allowed banks to invest in overseas equities and structured equity products, but only in markets of which regulators have signed memorandums of understanding with the CBRC, namely Hong Kong.

The effort is seen as a boost investment yields and make the QDII program more appealing.

"The gradual renminbi appreciation and surging domestic stock prices have hindered development of the program," said senior CBRC official Yin Long. The government has granted 22 banks a total quota of $14.8 billion under the QDII scheme, Yin said. But only $800-900 million has been used up.

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