(Yicai Global) Nov. 29 -- Taiping Life Insurance has increased its shareholdings in Industrial Commercial Bank of China, the world’s largest bank by assets, to more than 5 percent. The unit of insurance titan China Taiping Insurance Group’s bullish stance could drive up the share price of ICBC, as many Chinese lenders’ valuations languish below that of their overseas counterparts.

ICBC’s share price [HKG:1398] closed up 2.6 percent today at HKD3.88 (USD0.50).

Taiping Life Insurance paid HKD308 million (USD39.4 million) for 80 million shares in ICBC through the Shanghai-Hong Kong stock connect program on Nov. 25, bringing its total equity to 5.02 percent, or 4.4 billion shares, the Hong Kong-based insurer said in a filing to the Insurance Association of China yesterday. An investor is required by law to inform the securities regulator and bourse once its holdings in a particular company exceed 5 percent.

This is on top of a purchase of HKD310 million worth of shares on Nov. 22, according to a filing made on Nov. 24. Parent firm China Taiping Insurance Group owns 5.34 percent of ICBC, or 4.6 billion shares.

The funds used to buy the shares come from insurance liability reserves, Taiping Life Insurance said. As of Oct. 30, the company had made equity investments of CNY154.8 billion (USD21.5 billion), around 17.1 percent of the total assets held as of Sept. 30.

The value of Chinese banks and state-owned firms that have gone public are much lower than comparable overseas firms, China International Capital Corporation said in a research report published on Nov. 22. These companies are expected to start reassessing their valuations.

"It will be useful to explore the establishment of an appraisal system with Chinese characteristics to promote the market's function in resource allocation," Yi Huiman, chairman of the China Securities Regulatory Commission, said last week at the 2022 Financial Street Forum in Beijing.

Editor: Kim Taylor