The insurance fund has come again. On the evening of May 17, Jiangnan Water and Chengfa Environment announced that Great Wall Life Insurance Co., Ltd. (hereinafter referred to as "Great Wall Life") held more than 5% of the company's shares. This means that Great Wall Life has raised two listed companies at the same time. Up to now, insurance funds have been raised four times this year, and the bottom layout means obvious.

Jiangnan Water announced on the evening of May 17 that the Company received the Simplified Equity Change Report issued by Great Wall Life Insurance on the same day. As of the announcement, Great Wall Life Insurance increased its holdings of 46.7617 million shares in the company through the secondary market, accounting for 5.0001% of the company's total share capital, touching the "line of cards". As early as January this year, Great Wall Life Insurance bought 6.872 million shares of Jiangnan Water at an average price of 4.85 yuan per share, accounting for 0.7368% of the company's total share capital. Since then, it has continued to increase its position until the completion of this increase.

On the evening of the same day, Chengfa Environment announced that Great Wall Life had increased its holdings of 399500 shares of Chengfa Environment through centralized bidding transactions in the secondary market on May 16. In addition to its previously held shares, Great Wall Life held a total of 32104300 shares of Chengfa Environment, accounting for 5.0001% of the company's total capital stock.

As for the reason for listing two A-share companies, Great Wall Life Insurance said in an interview that this listing of two listed companies is an important embodiment of the company's practice of the long-term investment concept of insurance funds, promoting the long-term healthy development of listed companies, and playing the role of patient capital of insurance funds. The source of funds this time is the self owned funds of Great Wall Life Insurance.

After careful analysis, the two companies listed this time are both public utility environmental protection companies. A private equity firm in South China told reporters that the businesses of the two companies have the nature of natural monopoly and franchise rights, which are characterized by resistance to cyclical fluctuations, and are more consistent with the allocation needs of insurance assets. Moreover, such companies have the characteristics of high dividends and stable dividends, and are "a must for home" for insurance assets.

Great Wall Life also said that this increase in holdings was mainly based on firm confidence in the future development prospects of Jiangnan Water and Chengfa Environment, as well as recognition of their leading position in the industry. Being one of the important shareholders of a listed company by raising the board could not only provide long-term stable financial support for the listed company, stabilize its market price, but also effectively relieve its own asset allocation pressure, Realize mutual benefit and win-win results, and reflect the important functions of financial service entities. It is not ruled out that it is possible to continue to increase the shares of Jiangnan Water and Chengfa in the next 12 months.

This is not the first time that Great Wall Life has made a move. At the beginning of this year, Great Wall Life has made a big contribution. In January this year, Great Wall Life raised its brand in Bank of Wuxi (5.620, 0.02, 0.36%). According to the first quarter report of Bank of Wuxi this year, Great Wall Life Insurance holds 150 million shares, accounting for 6.97%, ranking third among the top ten shareholders.

Xu Kang, an analyst with Huachuang Securities, believes that the listing of Great Wall Life Insurance in Wuxi Bank is the second listing of insurance capital in bank shares after PICC Property Insurance in 2015. Banking stocks are currently characterized by significantly undervalued, low volatility and high dividends. Under the new financial instruments standard (I9), the floating gains and losses of insurance asset allocation banking stocks can be included in other comprehensive income, but dividends can enter the current profit and loss advantage, to some extent, reduce the impact of insurance asset equity allocation on income statement fluctuations. By the end of November 2023, the balance of funds used in the insurance industry had been invested in stocks and funds of RMB 3.38 trillion, accounting for only 12.4%, and the funds included debt based and hybrid funds, so there was still much room for improvement in equity allocation in the secondary market of insurance assets. He believes that, in the context of the continuous voice of the regulator to improve the enthusiasm and stability of long-term capital equity investment, and considering that the current equity market is at a low level, the long-term insurance funds of insurance companies are entering the market at the right time, and have relatively stable investment value in the long run.

Since last year, Great Wall Life has listed a number of listed companies. On the evening of June 2, 2023, Zhejiang Jiaoke and Zhongyuan Expressway both announced that Great Wall Life Insurance increased its stake in the company by means of centralized bidding transactions, hitting the "listing line". At present, Great Wall Life has more than 5% of the shares of domestic and overseas listed companies, including Financial Street, Zhejiang Jiaoke, Zhongyuan Expressway, Bank of Wuxi, Chengfa Environment and Jiangnan Water.

Prior to Great Wall Life Insurance, on January 4, Zijin Insurance announced on the website of China Insurance Industry Association that on January 2, the company purchased 47194700 shares of Huaguang Huaneng through agreement transfer, holding a total of 47194700 shares of Huaguang Huaneng, accounting for 5.0012% of the capital stock of Huaguang Huaneng. It is reported that the source of funds for this purchase of Huaguang Huaneng shares is also Zijin Insurance's own funds. This is also the "opening move" of insurance funds in 2024.

According to the public information, Huaguang Huaneng mainly focuses on the two major fields of environmental protection and energy to carry out integrated business such as design consultation, equipment manufacturing, engineering construction, operation management and investment.

"It is a win-win cooperation for Zijin Insurance and Huaguang Huanneng to go hand in hand, which is an important measure for both parties to optimize asset allocation." The relevant person in charge of Zijin Insurance said that for Huaguang Huanneng, the optimization of equity structure will improve the corporate governance structure, while grafting new resources, and the growth space is expected to be further opened. For Zijin Insurance, this investment has also achieved certain benefits. According to the current price in November or so, we have achieved 30% of the income, which has not only effectively maintained and increased the value of state-owned assets, but also actively optimized the asset allocation structure of insurance funds.

Yao Xusheng, wealth management partner of Paipai, said in an interview with the 21st Century Business Herald that in the first five months of this year, insurance funds have been raised four times, with a good start. The recovery of insurance funds is mainly related to policy support, market environment, investment strategy and other factors. From a policy perspective, the regulatory authorities have successively issued documents to encourage the insurance industry to increase its shareholding in listed companies, and guide insurance institutions to allocate more funds to equity assets. As an institutional investor, insurance assets attach great importance to value investment and long-term investment. Traditional fixed income investment faces challenges such as declining yield and insufficient supply of high-quality assets. Therefore, increasing equity investment is the general trend. At this stage, the asset valuation of the equity market is at the historical bottom. At this time, the listing belongs to the reverse layout, which is very consistent with the investment strategy of insurance capital, and has the opportunity to obtain a relatively considerable long-term return. The listing of insurance assets reflects the optimistic attitude of insurance assets towards the future equity market, which, to a certain extent, has boosted investor confidence.

Yao Xusheng said that on the one hand, insurance companies actively layout the equity market is the guidance and encouragement of regulatory policies, on the other hand, it is also related to the changes in equity investment strategies of insurance assets in recent two years. From the perspective of investment direction, China's economy is in a critical period of transformation and development. Different from the previous years' concentrated investment in listed real estate enterprises, insurance funds now focus more on investment in biomedicine, infrastructure, environmental protection, new energy, semiconductor, digital economy and other fields in line with the general direction of national industrial upgrading.