Investors hope China's huge market will bring growth

It was the biggest stock market listing anywhere in the world during 2003, raising $3.4bn (�1.8bn) in a double debut in New York and Hong Kong.

China Life issued its statement after the Financial Times newspaper reported US regulators had begun an inquiry.

Hong Kong regulators are also probing China Life, the FT said.

The newspaper reported that the US inquiry had been opened only recently and was still at an informal stage.

"To the best knowledge of the company, it has not received any notice from the US Securities and Exchange Commission in relation to the inquiry," said China Life in a legal statement.

"The company will co-operate with any inquiry made by the applicable regulators in Hong Kong and the US."

Legal challenge

In February, China's National Audit Office published a report into accounting irregularities totalling 5.4bn yuan ($650m; �350m) at China Life's parent firm.

China Life said that this had no implications for the listed company, which was spun off ahead of the mid-December 2003 stock listing.

But shareholders last week launched a US lawsuit on the grounds China Life failed to disclose the NAO inquiry and accounting problems in its listing documents. China Life has denied any wrongdoing.

Both the SEC and Hong Kong stock market regulator have refused to comment.

The FT report cited people close to the SEC.

It said the SEC investigation would progress to the formal stage only if investigators believed the inquiry should go further and wanted powers to compel the delivery of evidence.

Laying down a marker

With several more huge Chinese listings in the pipeline this year, investors are anxious to see former state-run firms meet international standards for disclosure.

China Life has 45% of China's insurance market, making it the biggest player in a market that remains undeveloped, and where market reforms are redrawing the welfare system.

With investors spotting huge scope for expansion, the share issue was 25-times oversubscribed.

Interest in Chinese vegetable producer China Green Holdings was even more frenzied; its Hong Kong listing in January was 1,600-times oversubscribed.

A formal SEC investigation into China Life would almost certainly cool investor enthusiasm for the forthcoming flotations of China's major banks, fixed line phone operator China Netcom, and flag carrier Air China.