China's financial regulator unveiled a series of measures on Thursday urging large state-owned mutual funds and insurance companies to buy more shares as Beijing tries to shore up a faltering stock market.

Wu Qing, chairman of the China Securities Regulatory Commission, said that large state-owned insurance companies should be guided to increase the scale and proportion of investment in domestically listed stocks and use 30% of new premiums to purchase stocks. A news conference will be held Thursday.

Wu said a pilot program to be launched in the first half of this year will channel at least 100 billion yuan ($13.75 billion) from insurance companies into long-term stock investments. He expects the program to continue to expand, injecting at least "hundreds of billions" into stock purchases each year.

Mutual funds are also required to increase their holdings of mainland-listed stocks by 10% annually over the next three years based on market valuation, he said.

A consortium of six financial regulators, including securities regulators, first proposed the plan on Wednesday to instruct large funds including pension funds to buy more local stocks, aiming to " Stabilize the stock market." Chinese from regulators.

Eugene Hsiao, head of China equity strategy at Macquarie Capital, said: “Having institutions such as insurance companies hold more Chinese stocks can help reduce volatility and create more stable trades based on fundamentals. environment."

He said the latest moves would help "build more attractive long-term investment options" after the housing market collapse damaged household wealth.

After the press conference, the benchmark CSI 300 index rose more than 1.8%, narrowing the index's decline this year to about 2.7%, London Stock Exchange data showed.

Although the CSI 300 index posted annual gains of 15% last year, the index ended this year down nearly 12% from its highest level for the year.

Beijing's recent piecemeal stimulus measures have dashed investors' hopes that the troubled economy will turn around in the near term, prompting a flood of money into safe government bonds and pushing yields to record lows.

In October, China's central bank launched a swap arrangement program to make it easier for insurance companies and brokers to buy stocks and relatively cheap central bank bills to finance share purchases and buybacks of listed companies.

Dividend payments and share buybacks by Chinese companies hit record highs last year, Wu said, while listed companies were encouraged to increase dividend payments ahead of the Chinese New Year later this month.

Wu pointed out that the current dividend yield of the CSI 300 reaches 3%, which is "significantly higher than the yield of 10-year government bonds." On Thursday, the benchmark 10-year Treasury yield was 1.671.

Thursday's announcement is expected to lead to an influx of capital into Chinese "value stocks," which are considered severely undervalued given their huge potential for future growth, said Raymond Lehman, China equity strategist at UBS.