GuShiio.com ① Since the end of 2024, Ping An funds of China have added positions in H shares of ICBC, Agricultural Bank of China, Postal Savings Bank, China Merchants Bank, and China Construction Bank.
② Under the new accounting standards, high-dividend stocks can be classified as FVOCI to smooth current stock price fluctuations and reduce current profit fluctuations, which is an important reason for this round of risk funds to increase positions in bank stocks.
Financial Union, February 25 (Reporter Wang Hong)Insurance funds continue to sweep bank stocks and H shares.
The latest news today shows that Ping An Group has continued to add positions in Agricultural Bank of China H shares and Postal Savings Bank H shares in recent days. A reporter from the Financial Union noted that since the end of 2024, China Ping An funds have added positions in H shares such as Industrial and Commercial Bank of China, Agricultural Bank of China, Postal Savings Bank, China Merchants Bank, and China Construction Bank, and there are even some placards. In addition, Xinhua Insurance, Great Wall Life Insurance and Xintai Life Insurance have all increased their holdings or even raised their names in bank stocks.
Industry insiders pointed out to reporters from the Financial Union that this round of insurance funds ‘increased positions in bank stocks is driven by many factors such as high dividend strategies, regulatory encouragement of insurance funds to enter the market, new accounting standards, low interest rate environment and asset shortage, and strategic synergy needs. Among them, under the new accounting standards, high-dividend stocks can be classified as FVOCI, thereby smoothing the fluctuations in current stock prices and reducing the fluctuations in current profits. This is an important reason for this round of insurance funds to increase their positions in bank stocks.
Ping An Group increased its holdings in H shares of Agricultural Bank of China and Postal Savings Bank
A reporter from the Financial Union noted that the latest data disclosed today showed that Ping An Group has continued to add positions in H shares of Agricultural Bank of China and H shares of Postal Savings Bank in recent days.
Specifically, the latest information from the Hong Kong Stock Exchange shows that on February 20, Ping An Insurance (Group) Co., Ltd. of China increased its holdings of Agricultural Bank of China’s H shares by 32.699 million shares at a price of HK$45,706 per share, with a total amount of approximately HK$149 million. On the same day, Ping An Insurance (Group) Co., Ltd. of China increased its holdings of 13.084 million shares of Postal Savings Bank (01658) at a price of HK$4.9195 per share, with a total amount of approximately HK$64.6367 million.
According to incomplete statistics from the Financial Union reporter, China Ping An funds have added positions in H shares of Industrial and Commercial Bank of China, Agricultural Bank of China, Postal Savings Bank, China Merchants Bank, and China Construction Bank since the end of 2024, and there are even some placards.
Specifically, for ICBC’s H shares, on January 2, 2025, Ping An increased its holdings by 155 million shares, and its shareholding ratio rose to 16.02%. As of February 24, Ping An’s total shareholding ratio reached 54.21%. Regarding Agricultural Bank of China’s H shares, on January 3, Ping An Asset Management increased its holdings of 16.521 million shares, involving HK$69.81 million, and its shareholding ratio rose to 5.03%; on February 17, Ping An Life again increased its holdings of 47.723 million shares, involving HK$215 million, and the cumulative proportion of outstanding shares reached 20.25%.
Regarding Postal Savings Bank’s H shares, on January 8, Ping An Asset Management increased its holdings to 5.01%, triggering a placard; February data showed that Ping An’s total share of outstanding shares held reached 19.14%. For China Construction Bank’s H shares, after increasing its holdings of 67.7 million shares in December 2024, it will continue to increase its holdings in 2025, with a total proportion of outstanding shares reaching 10.1%. For China Merchants Bank’s H shares, Ping An Capital increased its holdings to 5% on January 10, and subsequently continued to increase its holdings to 6.06%.
In addition, earlier on December 18, 2024, Ping An Asset Management increased its holdings of China Construction Bank’s H shares by 67.255 million shares, at a cost of approximately HK$424 million.
More insurance funds are also increasing their holdings in banking stocks
In addition to Ping An of China, Xinhua Insurance, Great Wall Life Insurance and Xintai Life Insurance have all increased their holdings or even raised their names in bank stocks.
Specifically, on January 24, 2025, Xinhua Insurance plans to acquire 329.6 million shares of Bank of Hangzhou held by Commonwealth Bank of Australia through an agreement transfer. After the equity changes are completed, it will account for 5.87% of Bank of Hangzhou’s total share capital.
Earlier, in January 2024, Great Wall Life listed Wuxi Bank. As of the end of the third quarter of 2024, Great Wall Life’s shareholding in Wuxi Bank had increased to 6.97%. Xintai Life Insurance has also increased its holdings of Bank of Beijing. As of the first quarter of 2024, Xintai Life Insurance Co., Ltd. increased its holdings of Bank of Beijing by 356 million shares, and its shareholding ratio increased by 1.68% to 4.70%, ranking among the fourth largest shareholder of Bank of Beijing.
Yang Fan, general manager of Beijing Paipai Network Insurance Agency Co., Ltd., told reporters from the Financial Union that on the one hand, bank stocks have the characteristics of strong performance stability, low valuation, and high dividend yield, which are in line with the investment preferences of insurance funds; on the other hand, policies encourage insurance funds and other long-term funds entering the market, the increase in bank shares by insurance funds is also actively responding to policy guidance.
Overall, the increase in insurance funds shows its long-term optimism about bank stocks, especially in the context of increasing global economic uncertainty. The defensive nature and stability of bank stocks make them an important allocation target for insurance funds.
Affected by factors such as high dividend strategy, insurance capital market entry policies, and accounting standards
According to a reporter from the Financial News Agency, this round of insurance funds ‘increased positions in bank stocks is driven by multiple factors such as high dividend strategy, regulatory encouragement of insurance funds to enter the market, new accounting standards, low interest rate environment and asset shortage, and strategic synergy needs. Among them, under the new accounting standards, high-dividend assets are allowed to be included in the FVOCI account, and dividends are included in the current income, so that stock price fluctuations do not affect the income statement. Smoothing performance may be an important reason for the increase in insurance funds and even the listing of bank stocks.
Industry insiders analyzed the Financial Union reporter and pointed out that banks listing insurance funds require approval by the State Administration of Financial Supervision and Administration, and the process is relatively complicated. Therefore, banks that “listing” insurance funds are not used as long-term equity investments, but as high dividend targets, and are included in the FVOCI account to obtain stable dividend income.
Starting from 2023, listed insurance companies will begin to implement the New Financial Instruments Standards (IFRS 9 Standards). Under the new standards, stock assets need to choose between FVTPL and FVOCI. If classified as FVTPL, stock price fluctuations will be directly included in current profit and loss, resulting in increased fluctuations in net profit; if classified as FVOCI, only dividends and dividends can be included in investment income, and stock fluctuations will not have much impact on insurance companies.
Sun Ting, an analyst at Dongwu Non-Bank, pointed out that after the implementation of the new standards, the correlation between insurance companies ‘net profit and the stock market has been significantly strengthened. At present, the stock investment of most listed insurance companies is mainly based on FVTPL, so stock market fluctuations have a greater impact on current profits and losses. In order to deal with this problem, there are currently two common strategies: long-stock investment and high dividend (OCI).
The so-called high dividend strategy refers to an investment strategy that mainly selects stock assets with stable dividends and high dividend yields and holds them in the accounting category of FVOCI. The fluctuations in the fair value of FVOCI stocks are not included in the current profit and loss, so it can be greater. Avoid the impact of short-term shocks in the stock market on the current income statement.
Zhang Kaifeng, a researcher at Minsheng Securities, also said that against the background of maintaining low long-term interest rates, lowering predetermined interest rates, and gradually implementing policies to support insurance equity funds entering the market, insurance funds are actively deploying stock assets, and major insurance companies continue to allocate additional bank stocks. Individual stocks with higher dividends, sound corporate governance, clear profit models and industry structures will be more favored by insurance companies. At the same time, under the new accounting standards, high-dividend stocks can smooth out current stock price fluctuations and reduce current profits by classifying them as FVOCI. Volatility.
In fact, in the past, every time the “asset shortage” caused by the rapid decline in long-term interest rates has been accompanied by a wave of insurance funds. Reporters from the Financial Union noted that in the wave of insurance capital placards in 2020, banks, as targets for high dividends and low valuations, have become the most popular industry for insurance capital placards. Agricultural Bank, Industrial and Commercial Bank of China, and Zheshang Bank have become insurance institutions. The bank with the most placards.
