The latest rebalancing path of insurance capital: preference for industrial and public utilities sectors, and the space for high dividend allocation continues to be released

(Image source: Visual China)

Blue Whale News, September 10 (Reporter Shi Yu) With the disclosure of the 2024 semi-annual report of listed companies, the latest layout trends of insurance capital in stock investment in the secondary market have also surfaced.

As of the end of the first half of 2024, the balance of insurance companies' capital utilization reached 30.87 trillion yuan, a year-on-year increase of 10.98%, and the corresponding annualized financial investment return rate and comprehensive investment return rate were 2.87% and 6.91% respectively. From the perspective of the investment direction of capital utilization, while increasing the income of fixed income investment, insurance capital is also actively seeking opportunities in the equity market.

According to Wind data, insurance companies held a total of 788 stocks in the middle of the year, an increase of 46 stocks from the end of the first quarter, and industrials, information technology, and materials are currently the most preferred areas for insurance funds. It is worth noting that as a representative of high-dividend assets, insurance funds reduced their positions in some bank stocks in the first half of the year. According to industry analysis, the current preference of insurance funds for high-dividend assets is not static, but makes differentiated choices with changes in the industry, company fundamentals and valuations.

The holdings of 788 stocks increased by 46 from the previous month, and the heavy positions in industrial, information technology and other fields

Specifically, according to Wind data, as of mid-2024, insurance institutions held a total of 788 stocks, an increase of 46 from the first quarter, with a market value of 1.22 trillion yuan, an increase of about 2.6% from the previous quarter.

Based on the first-level classification of the Wind industry, the industry with the largest number of securities held by insurance companies is the industrial sector, with 201 shares, an increase of 13 stocks from the previous month, followed by the information technology and materials fields, with 151 and 141 shares respectively, and about 100 stocks in the optional consumer industry are still favored by insurance funds.

In terms of the number of changes, the top three sectors are industrials, materials, and utilities. Among them, 33 stocks were held in public utilities at the end of the first half year, an increase of 8 stocks month-on-month, the highest increase.

According to the second-level classification of the Wind industry, goods capital, materials II., and technical hardware and equipment are the top three, with 147, 141 and 83 securities respectively.

Judging from the recent statements of insurance companies, "new quality productivity" has become a high-frequency word in the layout direction. A number of insurance companies said that they will focus on scientific and technological innovation and strategic emerging industries. Another example is that some insurance companies have proposed to lay out key industries such as technology, digitalization, health, and pension that are closely related to insurance services and risk reduction management.

From the perspective of individual stocks, Huamao Logistics has been favored by the most insurance institutions/products, and the number of shareholding institutions has reached 7. Among the top ten shareholders, Chinese Life occupies three seats through traditional-ordinary products, personal dividend accounts and traditional-ordinary products of China Life Property and Casualty Insurance. At the same time, China Life Insurance (i.e., Ruizhong Life Insurance) and China Merchants Cigna Life Insurance also appeared among the top ten shareholders as institutions. Among them, China Life Insurance reduced its holdings in the first half of this year, and other institutions were new entrants or increased their holdings.

From the perspective of the market value of the shares, Chinese Life has reached the highest market value of insurance capital due to the 68.37% shareholding of China Life Group, which is 599.9 billion yuan; Ranked 2-5 are Ping An Bank, Industrial Bank, Shanghai Pudong Development Bank and China Merchants Bank, among which, except for China Merchants Bank, the number of insurance capital holdings of the rest of the stocks has not changed, and China Merchants Bank has been reduced by everyone's life - universal products, and the top ten circulating shareholders have disappeared.

"In the second quarter, insurance funds reduced the positions of some banks, and the current preference of insurance funds for high-dividend assets is not static, with the changes in related industries, company fundamentals and valuations, insurance funds can make differentiated choices," China Merchants Securities analysis pointed out.

During the same period, 260 stocks were increased by insurance companies. The number of shares increased by Zheshang Bank first, and Xintai Life Insurance increased its holdings of Zheshang Bank by 225 million shares, with an increase of 1.05% and a shareholding ratio of 4.62% after the increase, ranking as the fifth largest shareholder of Zheshang Bank. In the first half of the year, Great Wall Life Insurance raised Ganyue shares, according to the reported data, the shareholding ratio has reached 6.18%, and the reference market value at the end of the period reached 746 million yuan.

The shares of OCI, a major listed insurer, increased by nearly 100 billion yuan from the beginning of the year, focusing on high-dividend assets

Among the more than 30 trillion yuan of insurance funds, the total investment scale of insurance funds of major listed insurance companies, including Chinese Life, Ping An of China, China Taibao, Chinese People's Insurance Company, Xinhua Insurance and China Taiping, has reached 18 trillion yuan, accounting for more than half of the industry, and the year-on-year increase has reached 13.%, slightly higher than the industry average.

The proportion of bond allocation of listed insurance companies exceeds 5%, and among the equity assets, stock investment assets account for about 7%, which is higher than the proportion of funds and long-term equity investment.

According to the statistics of China Merchants Securities, as of the end of the second quarter, the total number of OCI (other comprehensive income) stocks of major listed insurance companies was 355.219 billion yuan, a net increase of 96.5 billion yuan from the beginning of the year, an increase of 0.4 percentage points to 2% in the proportion of total investment assets compared with the beginning of the year, and an increase of 5.4 percentage points to 27.6% compared with the beginning of the year. ”

From the perspective of branches, Ping An's high-dividend stocks included in the FVOCI account are the largest and accounted for the highest proportion, and China Taiping's proportion of OCI shares increased the most in the first half of the year.

According to the analysis of China Merchants Securities, on the one hand, the downward interest rate and the shortage of structural assets have reduced the yield or scale of traditional high-dividend assets, and high-dividend stocks with stable income and relative risk control have become one of the important ways for insurance funds to win excess returns.

On the other hand, the impact of fair value changes on current profits has increased significantly under the new accounting standards, but by designating stocks with high dividends into the FVOCI account, insurance companies can reduce profit fluctuations by only reflecting the fluctuations in the market value of stocks in the balance sheet and only the dividends into the income statement.

Looking ahead, insurance capital, as patient capital and long-term capital in the equity market, has added impetus to increase the allocation of high-dividend assets. According to China Merchants Securities, from 2024 to 2026, the proportion of OCI stocks in the insurance industry in total investment assets will gradually increase to about 3%, and the incremental scale of high-dividend assets included in FVOCI accounts will be about 680.5 billion yuan in the same period. With the promotion of policy increases, the awareness of dividends of listed companies continues to increase, and the number of A/H high-dividend stocks and the level of dividends are expected to rise steadily.

At the same time, with the disclosure of semi-annual reports, a number of listed insurance companies have taken the initiative to speak out around equity investment, revealing further layout paths.

"The overall valuation of A-shares is in a market position and has long-term allocation value." At the recent interim results conference, Liu Hui, vice president of Chinese Life, said that the first is to adhere to a stable and balanced investment strategy, that is, adhere to a stable and balanced equity position; The second is to adhere to a diversified investment strategy, strengthen the absolute yield orientation, and increase the allocation of high-dividend stocks; The third is to practice the concept of long-term assessment and actively buy high-quality stocks that fall out of the cost performance.

For example, Chinese Insurance also clearly stated that it is necessary to strengthen the absolute return target in equity investment. In terms of investment strategy, we will continue to optimize the position structure of equity assets, focus on the stability of equity investment returns, and grasp the balanced relationship between absolute return and relative return, current income and long-term income, value investment and growth investment, OCI and TPL (financial assets measured at fair value through profit or loss), equity base and stock investment.