Insurance capital intensively researches the investment side of listed companies and is expected to recover
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Recently, insurance funds have continued to conduct research on multiple industries and related listed companies. Especially after listed companies released performance forecasts, insurance funds and other institutions have inquired about the performance of each company in 2023. In addition, the banking sector has also become another focus of insurance funds. In addition to research, some insurance funds have begun to increase their holdings of bank stocks.
Insurance capital research continues to advance
Entering 2024, insurance funds will conduct intensive research on multiple industries and related listed companies. The industries involved (Shenwan) include communications, electronics, banking, light manufacturing, computers, national defense and military industry, environmental protection and other sectors.
Tonghuashun data shows that as of press time, the number of insurance fund research institutions for many companies has exceeded 20, and the number of people participating in the survey has been more than 10. The number of insurance fund research institutions for companies such as Zhongji InnoLight, Xiechuang Data, and Zhongkong Technology has received insurance funds. In the forefront.
Among them, Zhongji InnoLight’s research activities at the end of January have attracted widespread attention from institutions, including China Re Asset Management, Sino-British Life Insurance and many other insurance companies also participated in the survey. It is worth noting that Zhongji InnoLight has just released the 2023 2023 Annual performance forecast, and research also focuses on the company’s performance in 2023 and other directions. The company stated that its annual performance in 2023 will achieve greater year-on-year growth compared with 2022. The profit range will be approximately 2 billion yuan to 2.3 billion yuan. Compared with 1.22 billion yuan in 2022, the increase will be around 63% to 88%. In the second half of 2023, some major overseas customers began to increase their demand for 400G optical modules for use in Ethernet 400G switch networks, and related orders and shipments also began to increase significantly. These are market opportunities brought about by the rapid growth of AI computing power. In 2023, the company has made sufficient preparations in terms of production capacity construction, raw material procurement and ensuring delivery capabilities, and has been able to achieve large-scale growth in related product revenue.
In addition to Zhongji InnoLight, Xiechuang Data also attracted a number of insurance funds to participate in the survey after releasing its performance forecast, including Huatai Insurance Asset Management, Lujiazui Cathay Life Insurance, etc. The research direction mainly focused on the performance in 2024.
Zhu Keli, executive director of the China Information Association and founding director of the Guoyan New Economic Research Institute, believes that the characteristics of insurance investment are first reflected in stability and long-term nature. The nature of insurance funds itself determines that they focus on protection and are more inclined to invest. Choose projects that can provide stable returns and have relatively low risks. In addition, the investment cycle of insurance funds is often long, allowing them to withstand short-term market fluctuations and focus on long-term value investments.
Focus on banking sector
It is worth noting that in addition to the above-mentioned sectors, the banking sector has received major attention from insurance funds. As of press time, since the beginning of 2024, insurance funds have participated in the survey of a total of 10 listed banks, including Bank of Shanghai, Bank of Suzhou, etc.
In early February, the Bank of Shanghai released a record of investor relations activities, and participated in the survey of insurance funds including Ping An Pension Insurance, PICC Asset Management, etc. In terms of focus, participating research institutions mainly focus on the bank’s corporate and retail loan plans in 2024, net interest margin performance in 2024, and special pension financial services.
Suzhou Bank successively released a number of investor relations activity records in January 2024, including insurance companies such as AIA, which also participated in the survey, while market attention focused on issues such as the level of provision coverage in the new year. In this regard, Suzhou Bank stated that in recent years, the bank has continuously strengthened risk screening and post-loan management, achieved significant risk control results, and maintained stable asset quality. In 2024, the bank will continue to make steady and prudent provision for impairment provisions in strict accordance with the requirements of financial asset risk classification levels, and strive to maintain a good provision coverage rate among peers.
In addition to continued research, insurance companies have also begun to invest in banking stocks. Previously, Great Wall Life Insurance Co., Ltd. (“Great Wall Life”) announced that between December 29, 2023 and January 9, 2024, the company purchased 9.9999 million Wuxi Bank A shares, holding a total of Wuxi Bank There are 107.6463 million A shares, accounting for 5.00% of the A-share capital of the listed company; the face value of “Wuxi Convertible Bonds” held is 37.386 million yuan, accounting for 1.28% of the unconverted balance of “Wuxi Convertible Bonds”.
Subsequently, Wuxi Bank issued an announcement stating that on January 19, 2024, Great Wall Life realized a change in equity through the conversion of convertible bonds into shares. After the change in equity, Great Wall Life held 138.8647 million shares of the bank, accounting for 10% of the bank’s total share capital. 6.36%, holding “Wuxi Convertible Bonds” with a face value of 38.388 million yuan, accounting for 1.40% of the unconverted balance of “Wuxi Convertible Bonds”.
In addition to listed companies, insurance companies are also actively investing in other banking assets. Minsheng Life Insurance Co., Ltd. previously announced on the website of the Insurance Association of China that it would acquire Zhejiang Online Commerce Bank Co., Ltd. (hereinafter referred to as “MyBank”) held by Wanxiang Sannong Group Co., Ltd. at a price of 3.05 yuan per share. ) 720 million shares. After the completion of the transaction, its shareholding ratio in online banking will be 10.96%.
Zhu Keli said that Great Wall Life’s recent actions such as listing Wuxi Bank and continuing to conduct research on insurance companies are a reflection of insurance capital’s increased investment in the banking sector. These measures not only demonstrate the confidence of insurance funds in the banking sector, but also send a positive signal to the market. In the current complex and ever-changing market environment, the banking sector is still an important area worthy of attention and investment. Banking stocks have the advantages of stable business, considerable profits, and strong risk resistance. In addition, high dividend rates can provide stable cash flow for insurance funds, which is also valued by insurance funds.
The investment side is expected to be repaired
The insurance industry operating situation table for December 2023 released by the State Administration of Financial Supervision and Administration shows that the balance of funds used by the insurance industry at the end of 2023 was 27.67 trillion yuan, including 2.72 trillion yuan in bank deposits, 12.57 trillion yuan in bonds, stocks and securities investment funds 3.33 trillion yuan; while the balance of fund utilization in the third quarter of 2023 was 27.18 trillion yuan, bank deposits, bonds, and stock and securities investment funds were 2.75 trillion yuan, 11.95 trillion yuan, and 3.48 trillion yuan respectively, and stock and securities investment The fund amount decreased slightly at the end of the fourth quarter compared with the third quarter.
The market generally believes that in 2023, under the influence of equity market fluctuations and other factors, the asset-side operations of insurance companies will be challenged and net profits will be under pressure. Guotai Junan Securities said that capital market fluctuations and the implementation of new accounting standards are expected to put pressure on the profits of listed insurance companies in 2023, and the dividends of listed insurance companies will remain stable.
Recently, some small and medium-sized insurance companies mentioned in their fourth quarter 2023 reimbursement report that due to the large fluctuations in the capital market in the fourth quarter, the investment rate of return declined, resulting in a decrease in actual capital, and an increase in the minimum capital for equity price risk.
China Pacific Insurance stated in its previously released investor relations activity records that with the implementation of new standards in 2023, capital market fluctuations will be fully reflected in the company’s net profits. Affected by the continued decline of the capital market, the company’s investment return rate is lower than the same period last year. The company’s operating profit has remained stable overall, but under the new standards, the company’s net profit will be more affected by the fluctuations of the capital market, and there is still great uncertainty in the full-year net profit.
Dongguan Securities believes that from the investment side of insurance companies, their asset allocation style is high-dividend blue-chip stocks, and their key allocation industries are non-bank finance, banks, etc. As long-term insurance capital gradually enters the market, the overall volatility of the investment portfolio will increase. With the switching of accounting standards, net profits will be more sensitive to changes in the equity market. The investment side of insurance companies will become more flexible. At the same time, the insurance company market will Judgment and long-term investment management capabilities put forward higher requirements. If the equity market picks up, insurance companies can effectively manage investment risks in the stock market and seize investment opportunities, and the increase in investment income will significantly increase net profits.
Pacific Securities said that looking forward to 2024, the insurance industry expects that the pessimistic expectations and the impact of the new standards have been fully digested, and the investment side is expected to recover under the expected recovery in 2024.
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