U.S. officials to meet in N. Korea A State Dept. envoy’s visit to Pyongyang this week appears aimed at restarting six-party talks on N. Korea’s nuclear programs. The communist country failed to disclose an inventory of its nuclear activities when it was due Dec. 31. Pyongyang had pledged to halt its nuclear programs in return for aid. The U.S. is trying to prod talks rather than provoke confrontation. INDONESIA: The country extradited 4 rebel soldiers suspected in the attempted...

HONG KONG: Chinese government suggestions that it may allow mainland insurance companies to invest in property could unleash billions of dollars in deals for commercial buildings and embolden developers and foreign investors who want a more active market.

Property investment typically gives insurers the steady income they need to balance long-term liabilities.

But Beijing wants to cool property prices, particularly in a housing sector fueled by an influx of eight million people into cities each year, so it has been wary about giving the green light to the prospective new players.

A slump of over 40 percent in the Shanghai stock market since a peak in October, however, has instilled a sense of urgency, with regulators realizing that insurance companies, flush with $300 billion for investment, need to diversify risk beyond stocks, bonds and deposits.

Yuan Li, a top executive at the China Insurance Regulatory Commission, told a news briefing Wednesday that the authority was studying the possibility of allowing insurers to expand investment into infrastructure and property but gave no time frame.

Such a move could put as much as $30 to 40 billion in investment into Chinese commercial property, said Stuart Leckie, an actuary and Chinese pensions expert who heads the advisory firm Stirling Financial.

“Its not going to happen this week or this month, but maybe over the next five years,” Leckie said, adding that his estimate was based on global industry norms of portfolio allocations of 10 to 15 percent to property.

Mainland Chinese insurers have long been property investors on the sly - taking advantage of being allowed to own their own headquarters and branch offices, but leasing out a lot of the space.

Top-notch offices in Shanghai and Beijing give an annual rental yield of about 8 percent, compared to 3 percent in Tokyo and 4 percent in Hong Kong.

Some insurers, though still technically barred from investing in property, are already getting a nod for specific projects.

The industry leader, China Life Insurance, owns 20 percent of the Oriental Plaza shopping, office and apartment complex in Beijing.

The second-biggest life insurer, Ping An Insurance Group, entered a $127 million joint venture in 2006 to build shopping centers anchored by Wal-Mart Stores.

Big investment by insurers would benefit developers of commercial properties like Guangzhou RF Properties and the Hong Kong developers Sun Hung Kai Properties and Cheung Kong.

It would also encourage foreign investors lured by fast economic growth in China, but who need to know that domestic funds can buy their buildings when it is time to exit and take profits.

“Its certainly going to create more liquidity, but it also creates more competition for foreign players,” said David Dudley, regional capital markets director for the consultants Jones Lang LaSalle in Hong Kong.

Because of a scarcity of big property investors in China, many office and retail buildings are sold by “strata” with buyers taking individual floors, complicating any sale of a whole block.

China has an estimated $678 billion worth of investment-grade property, compared to $1.3 trillion in Japan, according to UBS, and has drawn property funds run by Morgan Stanley, ING and Deutsche Bank.

Beijing is putting up more barriers to foreign property investors, including requirements for the creation of an onshore company and ministerial approval for deals. Newcomers to the market could try to team up with Chinese insurers, analysts say.

Such a deal was struck last year by the property fund manager Aetos Capital, which hired China Life to source deals as a possible precursor to a full-scale tie-up on building purchases.

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