China Life Insurance Group Sold 23mn CITIC Securities Shares

SHANGHAI, Jul 03, 2008 (SinoCast China Financial Watch via COMTEX) -- LFC | Quote | Chart | News | PowerRating -- China Life Insurance (Group) Company, the parent of China's largest life insurer China Life Insurance Co., Ltd. (NYSE: LFC, SEHK: 2628, and SHSE: 601628), had reduced its holdings in CITIC Securities Co., Ltd. (SHSE: 600030) from 5.32% to 4.97%, lower than the symbolic 5%, China's securities leader announced on July 1.

As of June 27, China Life Insurance Group had had about 330 million shares in CITIC Securities, accounting for 4.97% of the securities company's capital stock. Compared with the earlier 353 million shares or a 5.32% stake, the insurer sold about 23 million shares in CITIC Securities.

CITIC Securities closed at CNY 24.55 per share on June 27. That means that China Life Insurance Group has harvested more than CNY 560 million from the share sales.

Some industry insiders pointed out that China Life Insurance Group sold the shares in order to have a shining financial report for the first half of 2008.

In June 2006, CITIC Securities sold 150 million shares to China Life Insurance Group for CNY 1.394 billion, translating to CNY 9.29 per share. Then the securities company allotted bonus shares on the basis of one bonus share for each share. Therefore, the number of China Life Insurance Group's shares in CITIC Securities doubled to 300 million shares. The shares had become tradable in July 2007. Besides, China Life Insurance Group also bought some CITIC Securities shares in the secondary market.

Now, the original 150 million shares that China Life Insurance Group bought in CITIC Securities had had a market value of CNY 7.176 billion, considering the close on July 1 of CNY 23.92 per share.

Impacted by the share sales, securities stocks on Mainland China's stock market suffered sharp decline of 5.63% yesterday. CITIC Securities and Haitong Securities Co., Ltd. (SHSE: 600837) both plummeted more than 7%. And the Shanghai Composite Index was close to the symbolic low of 2,500.

From the beginning of this year, securities stocks suffered the steepest drops among all the stocks. Many securities companies including CITIC Securities have plunged more than 60%. And their main businesses, especially brokerage business, have been hammered heavily, said Feng Wei, a securities analyst at Sealand Securities Co., Ltd.

Last week, insurer was the most active share seller. During the first four trading days, net capital that withdrawn by insurance seats from the China stock market amounted to as much as CNY 2.223 billion, accounting for more than 50% of the total net capital outflow of CNY 4.376 billion.

(USD 1 = CNY 6.85)

From www.hexun.com, Page 1, Wednesday, July 02, 2008 info@SinoCast.com

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