BEIJING: China's leading life insurance company says it is exploring investment opportunities overseas as it warns of tough times ahead.

China Life Insurance says it expects the domestic-A share market to decline further in the second half of the year. It also believes that the impact of the US sub-prime crisis on global markets has yet to bottom out.

China Life has cut its stake in the global credit card issuer Visa by more than half, and says it is cautiously exploring overseas investment opportunities.

Liu Lefei, Chief Investment Officer of China Life Insurance Company, said: "We will keep in active touch with potential targets, but will be prudent before making any decisions."

The insurer bought a less than 1 percent stake in Visa in March for US$300 million - its first overseas venture.

China Life also says that it will explore domestic infrastructure projects such as energy, power and transportation, and keep an eye on opportunities in the financial services industry.

The company reported a 32 percent drop in first half earnings to US$2.3 billion as a weakening equity market dragged down investment income. It earned 15.8 billion yuan, or US$2.3 billion, in the first half of the year compared to 23.3 billion yuan a year ago.

But some analysts remain positive about the sector.

Kenny Tang, Director of Research at Tung Tai Securities Co Ltd, said: "I think the outlook is quite good because the penetration rate of the insurance product in mainland China is still low. It's just around two percent, so there's a lot of room to grow."

China Life expects the mainland's economy to continue to grow steadily in the second half of this year, paving the way for more opportunities to develop the life insurance industry. But it expects intensified competition within the industry, and more uncertainty in the capital markets. - CNA/de