Ping An International Finance Center in Shenzhen, image source Visual China.2024 At the end of the year, Ping An Life’s move to raise its stake in ICBC’s H-shares triggered market concerns.
Written by Xiao Wang Edited by Wen Shijun From Prism Tencent Xiaoman Studio
Writer Xiao Wang Editor Wen Shijun
Published by Prism Tencent Xiaoman Studio
Over the past 2024, gold has outperformed the majority of investment assets with an annual gain of 279, while the Shanghai Stock Exchange Index has risen 1275 over the same period.
However, the banking sector in the A-share market posted a 37,69 gain as a dark horse, significantly outperforming gold, and the six largest state-owned banks led the banking sector with a 48,42 gain.
Buy bank stocks is not only more cost-effective than buying bank wealth management, in the past year is more than buy gold and earn.
At the end of 2024, Ping An Life announcement disclosed that its holdings of Industrial and Commercial Bank of China H shares amounted to 15 triggered the lift, the balance of its holdings is as high as 58.321 billion yuan of the huge book.
Ping An Life’s lifting announcement is just the beginning, the Hong Kong Stock Exchange equity disclosure information shows that Ping An Capital Management and Ping An Insurance Group of China increased its holdings of ICBC H shares on December 31, 2024 and January 2, 2025 respectively, at a cost of about 1.252 billion yuan.
Insurance giants Ping An system wildly buy the universe Bank intended? Insurance companies, speculation in the stock market, make money?
Ping An Department in Hong Kong to buy bank stocks wildly
Before this Ping An Life rare lifting of ICBC H shares, Ping An Life in June and August 2024 has successively increased its holdings of ICBC H shares. In addition, Ping An Capital Management Ping An Group has also successively stepped in to increase its holdings of ICBC H shares.
ICBC 2024 half-yearly report shows that as of the end of June, Ping An Capital Management holds 14 of ICBC H shares, accounting for all ordinary shares3 41 . With the closing price of ICBC H shares on January 8, the market value of this part of the holdings has reached a huge 56.6 billion yuan.
Ping An Life’s announcement shows that as of the end of September 2024, the book balance of the company’s equity assets was 885.9 billion yuan, accounting for 19 81 of its total assets. The proportion of ICBC shares in its equity investment was about 6 58 .
Not only Cosmos Bank, the HKEx equity disclosure information also shows that on December 18, 2024, Ping An Capital Management and Ping An of China stepped in to increase their holdings of H-shares of Construction Bank at a total cost of about 802 million yuan.
On December 24, 2024, Ping An Capital Management increased its holdings of 3.5 million shares of Postal Reserve Bank H. On January 3, Ping An Capital Management spent 65.8 million yuan to increase its holdings of Agricultural Bank of China’s H shares.
Ping An of China is also currently the largest shareholder of HSBC Holdings, holding the shares for nearly a decade. HSBC Holdings’ continued high dividend strategy is also a favorite among investors. Ping An has also said that the HSBC is a financial investment, HSBC’s dividend rate is high, in line with the risk appetite of insurance funds and investment return requirements.
For a long time, bank stocks, especially in Hong Kong stocks are not favored by individual investors, and the stock price has been hovering at a low level for a long time. At a time when interest rates are gradually lowering, the high dividend value of bank stocks is becoming more and more prominent.
A listed insurance company in Beijing, bank stocks, low volatility, and long-term stable dividends, long-term is the focus of the allocation of insurance funds in the plate. In addition, Hong Kong stocks in the bank stock price is relatively low compared to A shares, dividend yield is higher.
Industrial and Commercial Bank of China, for example, after the stock price stood on a record high, its A-share dividend rate on January 9, 4 57, while the H-share dividend rate is still 6 80, the level of return significantly more than the A-share.
Similar to Ping An, China Taipao Group and Taiping Capital Management and other institutions in May last year also increased their holdings of Agricultural Bank of China H shares, costing about 1.14 billion yuan. The total market value of H-shares of Agricultural Bank of China held by Taipao Department is nearly 6 billion yuan.
Deng Bin, the former chief investment officer of Ping An of China, said in an interview with Surfing News and others in August 2024 that, in response to carry losses, Ping An’s asset side adheres to efficient asset allocation. Especially in the equity allocation, grasp two certainty direction One is the national policy to promote the new quality productivity related to the growth plate, grasp certainty of growth opportunities The second is the high dividend value stocks, which is also in recent years Ping An continued to increase the allocation of the plate. These stocks have reasonable valuation, strong cash flow and high dividend yield, which are suitable assets for insurance funds to hold for a long time.
In March 2024, Deng Bin also introduced a bullish 2024 equity allocation, Ping An’s insurance funds in 2023 when the capital market volatility downward, has bucked the trend to increase positions.
Another insurance industry veteran pointed out that insurance companies are switching between the old and new accounting standards, under the new standards, insurance companies can reduce profit volatility by OCI other comprehensive income account, share price fluctuations are included in comprehensive income, while dividends are included in profit and loss for the current year, which is an important reason why Ping An lifted the bank stocks.
Insurance funds have also benefited greatly from allocating to bank stocks in the context of the dividend theme that will dominate both A-shares and H-shares in 2024. Taking the H-shares of ICBC, in which Ping An Capital Management has a long position, as an example, it has risen by 50 94 in 2024. The market value of Ping An Capital Management’s shareholding surged by 19.5 billion yuan, while receiving dividends amounting to 3.725 billion yuan. With the large state-owned banks carrying out interim dividends one after another, shareholders can enjoy the dividends of their development even faster.
Ping An of China’s third quarterly report shows that in the first three quarters of 2024, the company’s insurance capital investment portfolio achieved an annualized comprehensive investment return of 5 0 , up 1 3 percentage points year-on-year.
Insurers are heavily invested in Moutai Unicom Yangtze River Power
With the capital market being significantly undervalued and the long-term configuration value highlighted, insurers have been lifting more shares in listed companies.
According to the China Insurance Association information incomplete combing, 2024 a total of eight insurance companies listed 17, a record high in the last four years, and 2022 2023 insurance companies listed very few.
Among the listed companies, insurers mainly focus on the financial, banking, securities, pharmaceutical, green energy and utilities sectors, which are mainly characterized by low volatility and high dividends, as well as in line with national policies and the future development trend of environmental protection.
The financial regulators are also encouraging and guiding insurance funds to enter the market to grow patient capital. At a press conference on financial support for high-quality economic development held by the State Council Information Office on September 24, 2024, Wu Qing, Chairman of the Securities and Futures Commission, said that it is important to remove institutional barriers affecting the long-term investment of insurance funds, and to promote insurance institutions to be firm value investors and provide stable long-term investment in the capital market.
Li Yunze, director of the State General Administration of Financial Supervision, also said that expanding the pilot reform of long-term investment of insurance funds Supervising and guiding insurance companies to optimize the assessment mechanism, encouraging and guiding insurance funds to carry out long-term equity investment.
Statistics from the State General Administration of Financial Supervision show that as of the March quarter of 2024, the balance of insurance companies’ fund utilization reached 32 15 trillion yuan, with an annualized comprehensive investment return of 7 16 and an annualized financial investment return of 3 12 . Of this, the combined balance of property and casualty insurers invested in equities amounted to 2 33 trillion yuan. Compared with 1 94 trillion yuan at the end of 2023, the increase reached 20 1 , and the growth rate exceeded the growth rate of the balance of insurance funds.
According to Wind information statistics combing, as of the end of 2024 3 quarter, the insurers long position in the circulation of stocks, the top 50 long positions in 24 of the bank stocks. In addition, the insurers long position in the Yangtze River Power China Unicom Guizhou Maotai China Telecom China Nuclear Power, etc., are also recognized by the market blue chip dividend plate.
In particular, Ping An Life long position in the Yangtze River Power, its hydroelectric power generation business in the capital market is not sexy, but with stable performance and dividends, since 2016 to 2024 steadily out of the 309 increase, so that the market marveled. According to Yuanchuan Investment Review calculations, since the mid-2015 report Ping An capital management has appeared in the top ten shareholders of the Yangtze River Power, holding shares so far, Ping An capital management in the Yangtze River Power accumulated profits of more than 20 billion yuan.
In addition, according to Wind information data collation, the insurance fund in the third quarter to increase the position of the main stocks, including Shanghai Agricultural and Commercial Bank Gree Electric Appliances Shanghai Pharmaceuticals China Merchants Highway Construction Bank and so on. And the insurance fund to reduce the position of more stocks, including Tsingtao Beer China Petroleum Zhejiang version of the media, and so on.
Among them, China Life adjusted the position of more action, its substantial reduction in the position of the Postal Savings Bank of China Petroleum and other stocks, increased holdings of China Merchants Highway China Telecom and XCMG machinery and other stocks.
A large insurance company sources revealed that the A-share market in late September, so that the company’s investment income to turn a loss into a profit. Taking advantage of this wave of market, insurance funds have also been adjusted, will be part of the investment in the bag, liquidation of some of the deterioration of fundamentals of the company, and turn to long-term bullish plate.
Insurance companies bottoming out the stock market to make money
The current insurance companies are not resting on their laurels. Accompanied by the long-term downward trend of interest rates in the domestic financial market, insurance companies are facing a huge risk of carry loss, that is, the insurance funds investment yield is lower than the average predetermined rate of interest on insurance contracts and the loss caused by, in addition, the capital market shock intensified, resulting in the industry’s net profit under pressure significantly.
As a long money Representatives, in 2023 when the market sentiment is low, the insurance company Plunging stock market.
Su Gang, chief investment officer of China Tai Insurance Group, has pointed out at the 2023 third-quarter results meeting that the equity market is facing huge volatility, but the valuation is in a relatively favorable range. Insurance assets adhere to the stability of long-term strategic asset allocation.
In terms of specific allocations, PICC has increased the proportion of government bonds on the one hand, and continued to increase the proportion of high-dividend yielding equity assets with controllable fluctuations on the other hand, and fully utilized the favorable arrangement of the new accounting standards for the classification of OCI-type assets, so that the company is able to better share in the effective enhancement of such high-dividend yielding assets to the NII, and at the same time, better control the impact of the fluctuation of the market capitalization on the accounting profit.
With the bond market on fire in the first half of 2024 and the capital market bottoming out in the third quarter, insurance companies are finally raising their eyebrows.
The third quarterly report shows that the insurance company by virtue of speculation in the stock market has made money. China Taipao three-quarter report shows that its 2024 three-quarter operating income rose 44 2 , net profit jumped 173 6 , the first three quarters of net profit rose 65 5 , the main reason are the impact of the rising capital market.
China Taipao also pointed out that in the market interest rates continue to be low, the company to strengthen the active management of equity, continue to do a good job of low valuation, high dividends, long-term profit prospects of equity investment varieties allocation, and actively respond to the low interest rate market environment, and achieved good results.
China Life’s financial report showed that its net profit in the first three quarters of 2024 jumped 173 9 year-on-year to 105.904 billion yuan. The company said that the stock market rebounded rapidly after a low-level shock in the third quarter of 2024, and the company’s total investment income rose sharply year-on-year.
The insurance industry veteran mentioned above also pointed out that a large portion of the insurance company’s investment income in 2024 also relied on bonds brought in by earlier allocations. These bonds, which did not have outstanding returns at the time, look very attractive in the current low interest rate environment. Headline large insurers are clearly benefiting from the bond market dividend, and the divergence between old and new insurers will be more pronounced.
United Credit Union pointed out that in the first three quarters of 2024, the net profits of China’s personal insurance and property and casualty insurance companies all showed year-on-year growth, of which the net profit scale of personal insurance increased significantly due to the implementation of the new guidelines and the impact of the rebound of the capital market The major profit realization of the industry is still concentrated in the head of the large-scale insurance companies, and small and medium-sized insurance companies continue to be under pressure in terms of profitability. The capital market may continue to be volatile in the future, and profit realization of the insurance industry will still face certain pressure.
In the latest China Financial Stability Report 2024, the central bank mentioned the risk of spread loss of life insurance companies and their response, which also aroused market concern. The central bank pointed out that, from the asset side, affected by multiple factors such as low interest rate environment The return on equity assets is less than expected, the yield on capital utilization of insurance companies has continued to decline in recent years. From the liability side, life insurance companies generally set predetermined interest rates and longer term. With the downward trend of interest rates, reserve replenishment has increased.
Regulation is also stepping in to guard against the risk of carry losses. In August 2024, the General Administration of Financial Supervision issued a notice to the industry on the sound pricing mechanism for life insurance products, which lowered the cap on the predetermined interest rate for general insurance products from 30 to 25 from September 1, while the caps for participating insurance and universal life insurance were adjusted downward to 20 and 15 on October 1, respectively.
Previously, in the deposit rate financial income and other continued downward, the scheduled interest rate in 3 or even 3 5 of the insurance products once became the configuration of the new favorite of the high net worth individuals, the insurance industry tens of millions of large single frequently.
At Ping An’s 2024 interim results meeting in August last year, Guo Xiaotao, Ping An’s co-chief executive officer, said that the regulation of timely action to reduce the predetermined interest rate, effectively preventing the deterioration of the industry’s spread loss. For Ping An, the reduced cost of liabilities can effectively ensure a balanced product mix and effectively maintain product margins.
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