Chinese insurers adjust equity holdings but keep long-term stance, outlets report
In short
Chinese outlets, citing Economic Reference News, report that insurance funds have recently rebalanced equity holdings but reduced them only in limited amounts. Regulator data cited by Yicai and Jiemian show insurers' stock and fund holdings at 6.39 trillion yuan at the end of the second quarter, 16.23% of invested funds.
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Insurance funds have made periodic adjustments to their equity holdings, but the overall volume of reductions is limited, according to a report by Economic Reference News (经济参考报) that 36Kr, Yicai and Jiemian carried on 20 October. The report says market volatility has increased recently, drawing attention to how insurers are changing their equity allocations. [ 1 , 2 , 3 ]
The report, based on interviews with several industry figures, says insurers' own-account large accounts are bound by position requirements and cannot cut holdings on a net basis. Outsourced accounts, it says, face client redemptions and drawdown constraints. It says the core orientation of insurance money as long-term capital for long-term investment has not changed. [ 2 , 3 ]
Yicai and Jiemian cite data from the National Financial Regulatory Administration. At the end of the second quarter this year, the balance of insurance fund investments passed 40 trillion yuan for the first time. Insurers' stocks and securities investment funds totalled 6.39 trillion yuan, or 16.23% of the balance, a record in both amount and share. Stocks alone made up 10.41%, up on the previous quarter for the eighth quarter in a row. [ 2 , 3 ]
The reports say the pace of insurers taking large stakes has slowed markedly. Through IPO strategic placements and private equity funds, they say, insurers are putting patient long-term money into technology and new quality productive forces. [ 1 , 2 , 3 ]
Looking to the fourth quarter, several insurers lean towards cautious optimism. The reports say their allocation focus is on high dividends plus technology growth, with more stress on earnings certainty and valuation safety margins. [ 1 , 2 , 3 ]
Why it matters
The reports describe insurers as a continuing source of long-term money for equities, including technology companies, despite recent market swings. Several insurers are described as cautiously optimistic about the fourth quarter.
Key facts
- Amid greater market volatility, insurance funds have made periodic adjustments to equity holdings, but the overall volume of reductions is limited. [ 1 , 2 , 3 ]
- Insurers' own-account large accounts are bound by position requirements and cannot cut holdings on a net basis, while outsourced accounts face client redemptions and drawdown constraints. [ 1 , 2 , 3 ]
- The National Financial Regulatory Administration's data show the balance of insurance fund investments passed 40 trillion yuan for the first time at the end of the second quarter. [ 2 , 3 ]
- Insurers' stocks and securities investment funds totalled 6.39 trillion yuan, or 16.23% of the balance, which the reports call a record in both amount and share. [ 2 , 3 ]
- The stock allocation share was 10.41%, higher than the previous quarter for the eighth quarter in a row. [ 2 , 3 ]
- The pace of insurers taking large stakes has slowed markedly, while IPO strategic placements and private equity funds are used to put money into technology and new quality productive forces. [ 1 , 2 , 3 ]
- For the fourth quarter, several insurers lean towards cautious optimism, focusing on high dividends plus technology growth and stressing earnings certainty and valuation safety margins. [ 1 , 2 , 3 ]
Confirmed by several sources
- Nothing is confirmed by two independent outlets yet.
Still unclear
- How large the recent insurer reductions in equities actually were. The reports say only that the volume is limited and give no figure; the people interviewed are not named.
- How the fourth-quarter outlook will play out. The reports attribute a cautiously optimistic view to several insurers without naming them.
- Insurance funds have made periodic equity adjustments, but overall reductions are limited and the long-term investment orientation has not changed. Reported by a single source so far
- National Financial Regulatory Administration data show insurance fund investments passed 40 trillion yuan at the end of the second quarter, with stocks and funds at 6.39 trillion yuan, 16.23% of the balance. Reported by a single source so far