Financial Services Association, April 8 (Reporter Wang Hong) Also saw insurance capital reduce real estate stock holdings. Financial Street recently issued an announcement stating that Dai Life recently reduced its shareholding by 1.01%. After the reduction is completed, Dafa Life's shareholding ratio in Financial Street is 9.1%. Everyone Life said it will consider whether to increase or decrease its holdings within the next 12 months.

In addition to Everyone Life Insurance, other insurance funds also reduced their holdings of real estate stocks such as Poly Development and Country Garden in 2023. On the other hand, high-yield stocks will become a key direction for increasing insurance capital allocation in 2024. Some brokerage analysts pointed out that the incremental asset allocation for insured high-yield stocks will reach 189.1 billion yuan in 2024. Industry insiders pointed out that based on the long-term cost advantage of debt, in the current investment environment, insurance capital prefers to obtain assets that are slightly higher than the return on bond investment, and also assets that are more than 3% higher than their debt cost.

Daida Life reduced its holdings in Financial Street to less than 10%

Financial Street recently issued an announcement stating that from March 19, 2024 to April 2, 2024, Dada Life Insurance Co., Ltd. reduced its holdings of Financial Street shares by about 30.133 million shares through centralized bidding, accounting for 1.01% of Financial Street's total share capital.

Previously, from September 6, 2021 to December 22, 2021, Dada Life Insurance Co., Ltd. reduced its holdings of Financial Street shares by 11931,520 shares through centralized bidding and bulk transactions, accounting for 3.99% of Financial Street's total share capital, and has completed notifications and announcements on changes in shareholding. The total reduction in shareholding during these two stages has reached 5% of Financial Street's total share capital.

Before the share transfer was completed, Dajia Life Insurance Co., Ltd. held 421555101 shares in Financial Street, with a shareholding ratio of 14.10%. After the share transfer was completed, Dajia Life Insurance Co., Ltd. held 272108601 shares in Financial Street, with a shareholding ratio of 9.10%.

“The reduction in holdings is in line with expectations. Everyone Life has already reduced its holdings in Financial Street in 2021. Risk can also be appropriately reduced by reducing holdings. Fluctuations in real estate stock prices or unanticipated business data have an impact on insurance investment strategies,” Yan Yuejin, research director of Yiju Research Institute, told the Financial Federation reporter.

As of the date the report was signed, in addition to this equity change, Dai Life will decide whether to increase or decrease its shares in Financial Street within the next 12 months based on the overall state of the securities market and factors such as the development of listed companies and their stock prices.

Attorney Yang Yingchao of Beijing Yunting Law Firm told the Financial Federation reporter that the shareholding ratio of Dajia Life after the current reduction is 9.10%. It is a major shareholder holding 5% or more of the shares, and must abide by the disclosure regulations relating to the majority shareholders' holdings reduction. However, the shares that Daehan Life reduced its holdings this time are shares it purchased through centralized bidding transactions in the secondary market in December 2014, so there is no need to disclose its holdings reduction plan in advance, nor do future holdings reductions need to be disclosed in advance. In addition, according to the “Administrative Measures on Acquisitions of Listed Companies”, for every 5% increase or decrease in the shareholding ratio after that, everyone's life should make reports and announcements, and prepare a report on changes in equity as is currently the case.

In addition to Financial Street, Daida Life also reduced its holdings of Jindi Group by a large percentage. According to the financial report of Jindi Group, as of the end of 2023, Dai Life held 43.659 million shares of Goldland Group, with a shareholding ratio of 0.97%, reducing its holdings by about 120 million shares during the year. In addition, Da Life also holds 29.58% of COSCO Group's shares, making it the second largest shareholder.

In addition to Everyone Life Insurance, other insurers are also reducing their holdings of real estate stocks. In 2023, several insurance companies' financial accounts reduced their holdings of real estate stocks such as Poly Development, Country Garden, Vanke A, China Merchants Shekou, and Jindi Group, and some insurers even cleared real estate stocks.

Insurance capital favors high-dividend stocks this year

At the recent performance conference of listed insurers, a number of insurance company executives stated that increasing the allocation of high-dividend stocks will be a key direction for insurance capital in 2024.

Liu Hui, vice president of China Life Insurance, said that in terms of equity investment, while increasing returns, the focus is on the allocation value of high-dividend stocks to reduce the volatility of equity portfolios. Su Gang, chief investment officer of China's Taibao, said that in the past year, Taibao received a sharp increase of nearly 40% in dividends and dividends from high-dividend stocks. Huang Benyao, the proposed president of People's Insurance Asset Management, said that the allocation of listed companies with relatively stable profitability and a high level of long-term sustainable dividends will be further strengthened. Yang Yucheng, chairman of Xinhua Insurance, said that current insurance funds still pursue steady, risk-free returns, and are more optimistic about high-dividend and high-dividend industries, as well as high-tech, new energy, resources and minerals industries.

According to the Guotai Junan Non-Bank Financial Research Team, high-dividend assets will continue to be an important investment in insurance fund equity allocation. If only the impact of the change in accounting standards is taken into account, it is estimated that in 2024, 2025, and 2026, the incremental allocations of high-dividend assets of insurance funds will be 189.1 billion yuan, 224 billion yuan, and 263.3 billion yuan, respectively.

“The reason insurance capital invests in high-dividend stocks is because of the long-term debt cost advantage. It hopes to obtain assets that are slightly higher than the return on bond investment, and also higher than its debt cost of 3%. However, the advantage of more investors in the market is not on the debt side. In the current debt contraction cycle, there are few high-return projects. For investors, the investment logic has changed from pursuing returns to pursuing value preservation and appreciation. Market logic is the same as insurance logic. So now, on the one hand, there is a high increase in time deposits, and on the other hand, high dividends are being sought after,” an insurance asset management person told the Financial Federation reporter.