Our reporter Leng Cuihua
Great Wall Life Insurance Co., Ltd. (hereinafter referred to as "Great Wall Life") recently raised its brand in the open market, Jiangnan Water and Chengfa Environment, attracting market attention. This is the second time that Great Wall Life has raised its brand for listed companies since 2023, when it raised its brand for Zhejiang Jiaoke, Zhongyuan Expressway and Wuxi Bank.
Industry insiders believe that the current listed insurance companies pay more attention to long-term investment, focusing on high dividends and low volatility assets. The national policy guidance superimposes the current investment environment faced by insurance assets, and it is expected that the equity investment of insurance enterprises will further increase in the future.
Raise two listed companies
Great Wall Life raised two listed companies in succession. According to the announcement of the listed company, as of May 17, Great Wall Life Insurance held a total of 46.7617 million shares of Jiangnan Water by way of shareholding increase in the secondary market, accounting for 5.0001% of the company's total share capital. At the same time, on May 16, Great Wall Life Insurance increased its stake in Chengfa Environment by 399500 shares through centralized bidding transactions in the secondary market. After the increase, it held a total of 32104300 shares of the company, accounting for 5.0001% of the company's total share capital.
For the purpose of listing the two listed companies mentioned above, the relevant responsible person of Great Wall Life told the reporter of Securities Daily that this 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. In recent years, Great Wall Life Insurance has given full play to the advantage of "long-term investment" of insurance funds, committed to investment in infrastructure, people's livelihood and energy, and has taken ESG and new quality productivity as key investment directions.
In addition, Great Wall Life also said that, based on its recognition of the environment of Jiangnan Water and Chengfa, its optimism for its future development, and its confidence in the long-term development of China's capital market, it has become one of the important shareholders of the two listed companies mentioned above by raising its shingle, which can not only provide long-term and stable financial support for listed companies, but also effectively alleviate the pressure on its own asset allocation, To achieve mutual benefit and win-win results. In the future, in terms of investment, we will fully adhere to financial services for the real economy and be patient capital in the market.
The meeting of the Political Bureau of the CPC Central Committee held on April 30 stressed the need to strengthen patient capital. At the same time, the new "National Ninth Article" also proposes to "optimize the policy environment for equity investment of insurance funds, implement and improve the performance evaluation methods of state-owned insurance companies, better encourage long-term equity investment, improve the regulatory system for equity investment of insurance funds, and optimize the information disclosure requirements of listed insurance companies". Industry insiders believe that the investment of insurance funds will be more patient with capital characteristics in the future.
Cao Zhe, chief investment officer of Elvin Zhilue, told the reporter of Securities Daily that raising a card is an important buying behavior of insurance assets, which means that it will not withdraw in a short time, and it may play an important role in the future at the shareholder level of the buying company, the corporate governance structure of listed companies and the resolution of the shareholders' meeting. Therefore, The two listed companies of Great Wall Life reflect the concept of financial services for the real economy.
Ge Yuxiang, a non bank financial analyst of Soochow Securities, told the Securities Daily that if Great Wall Life had a director in the aforementioned listed company, it could be included in the long-term equity investment and subsequently measured according to the equity method. The change in the share price of the listed company would not affect the book value of Great Wall Life on the investment object. If there is no director, under the new financial instrument standard, Great Wall Life Insurance is expected to conduct subsequent measurement according to FVOCI (financial assets measured at fair value and the changes are included in other comprehensive income) to reduce the current profit fluctuation caused by equity investment.
Equity investment or continuous improvement
From the perspective of the overall asset allocation of insurance funds, the proportion of equity investment in insurance funds has been relatively stable in recent years. Industry insiders believe that the policy guidance and encouragement of overlapping insurance companies' own needs are expected to continue to increase equity investment in the future.
Historical data shows that the share of insurance capital stocks and securities investment funds reached a high of 15.18% at the end of 2015, and most of the years since then fluctuated between 12% and 14%. By the end of 2023, the total allocation balance of insurance funds to stocks and securities investment funds was about 3.33 trillion yuan, accounting for about 12% of the investment.
Huang Dazhi, a researcher of Xingtu Financial Research Institute, told the reporter of Securities Daily that at present, there is a good opportunity for insurance funds to increase investment in the equity market. First, policies encourage insurance funds to increase investment in the capital market, including lowering the risk factors of insurance companies' investment in the Shanghai and Shenzhen 300 index constituent stocks. Second, the policy encourages listed companies to pay more dividends, and has formulated corresponding regulatory rules to continuously improve the investment environment for insurance capital equity. In general, long-term investment of insurance funds does not pursue the bid ask spread of stocks in the short term, but attaches more importance to the stable dividends of listed companies. Third, the current valuation of listed companies is in a low position, and the current increase in investment of insurance assets also has valuation advantages.
In Huang Dazhi's view, with a view to the future, in the overall asset allocation of insurance assets, equity assets are very important for increasing their overall earnings. In particular, the current deposit interest rate continues to decline, and the bond yield also shows a downward trend and exposes some risks. It is expected that the proportion of equity assets of insurance assets will continue to increase in the future.
Ge Yuxiang said that at present, the valuation of A-share listed companies is at a historical low, and supporting policies such as strict supervision and encouraging listed companies to pay more dividends continue to improve, and the investment ecology faced by insurance assets continues to improve. Therefore, the current listing of insurance funds is a good time point, but it also needs to face pressure from solvency.
In addition, under the new accounting standards, if the equity investment is classified as FVTPL (financial assets measured at fair value and whose changes are recorded in the current profits and losses), it will increase the impact on the current net profit. Therefore, the insiders believe that the equity investment of insurance companies will pay more attention to long-term investment, truly practice the long-term investment philosophy of patient capital, more favor high dividends, low volatility assets, and classify assets as FVOCI to reduce the impact of investment on current net profits.
