China Pacific Insurance Asset Management Co., Ltd. ("PICAM") announced on June 19th that Huang Benyao is no longer the CEO after company approval. The board of directors appointed Huang Ming as the interim head of the company.

In recent years, insurance investment has faced significant pressure in the trend of capital market volatility and long-term interest rate decline. As the person in charge of PICAM's RMB 1.7 trillion of managed assets, how will Huang Ming respond to challenges in the future?

"At a symposium marking the 20th anniversary of China's insurance asset management industry reform and development, Huang Ming said that in recent years, due to black swan events such as the epidemic and the conflict between Russia and Ukraine, the equity market has fallen sharply, and the interest rate center has oscillated downward. Investment income of insurance funds has come under pressure, and the risk of interest rate spread losses in the industry has increased. The importance of asset-liability management has continued to rise. Insurance asset management institutions should fully leverage their advantages of large capital, long liability duration, and diversified investment products to strengthen high-quality financial services in major strategies, key fields, and weak links, and carry out in-depth and solid work in five areas of technology finance, green finance, inclusive finance, pension finance, and digital finance."

Huang Ming has been appointed as the interim head of PICAM.

On May 22, Huang Benyao, who had just been approved for the position of CEO of PICAM, was transferred to China Life Insurance Group to serve as a member of the Party committee. Since then, the position of PICAM's CEO has been vacant.

PICAM announced on June 19th that Huang Benyao is no longer the CEO of the company. The board of directors appointed Huang Ming as the interim head of the company until the board appoints a new CEO and his or her qualification is approved by the China Banking and Insurance Regulatory Commission.

Public information shows that Huang Ming is currently a member of the Party committee, vice president, and interim head of PICAM, and a doctor of economics.

Huang Ming used to be the head of the third department of the investment banking department of Guangdong Securities, general manager of the securities research center; and analyst, chief analyst, and deputy general manager of the Fund Analysis Department of PICAM. He was also the deputy general manager and general manager of the Bank / Foreign Exchange Department, general manager of the Fund Investment Department, and general manager of the Equity Research Investment Department. Additionally, he was also a member of China Pacific Insurance (Group) Co., Ltd. Party committee and assistant general manager of Tai Ping Life, as well as the party committee member and vice general manager of the Tai Ping Financial Audit Services (Shenzhen) Co., Ltd. and Tai Ping Petrochemical Financial Leasing Co., Ltd.

At the Central Financial Work Conference, it was explicitly stated that great efforts will be made in five areas: technology finance, green finance, inclusive finance, pension finance, and digital finance. Huang Ming has said that "currently, China has made remarkable breakthroughs in 5G-related technologies and new emerging technologies such as artificial intelligence, cloud computing, and quantum computers. Green and low-carbon development is rapidly advancing, and the 'dual-carbon' target is being steadily implemented. China's economic development has shifted from the previous emphasis on quantity to the emphasis on quality, which will significantly change the investment structure of the equity market and indicate the direction of structural opportunities for investors."

PICAM may further increase its allocation of undervalued and high-dividend stocks.

PICAM was established in 2003 as the first domestic insurance asset management company approved by the China Insurance Regulatory Commission and initiated by China Pacific Insurance (Group) Co., Ltd.

As of the end of 2023, the asset management scale of PICAM is RMB 1.7 trillion, an increase of 14.7% from the beginning of the year. The net profit reached RMB 498 million, a year-on-year increase of 3.11%, and was the only subsidiary of China Pacific Insurance (Group) Co., Ltd. to achieve positive net profit growth in 2023.

Regarding the fixed-income and equity markets in 2024, Huang Ming predicted at the 2024 Global Market Outlook and Investment Strategy Seminar that in the fixed-income market, the interest rate center will slightly decline, and the 10-year treasury bond yield will fluctuate within the range of 25 basis points up and down relative to the medium-term lending facility rate.

"Currently, the actual interest rate is relatively high, and the adjustment of local government debt by the central government will push interest rates downward, and there is also downward space for interest rates in the private sector. On the other hand, with the strengthening of fiscal policy and the recovery of corporate profits, there is also upward pressure on interest rates. Considering all factors, the overall trend is for interest rates to decline slightly." Huang Ming said.

In addition, affected by policies, the supply of high-quality urban investment projects will significantly decrease, which will cause insurance companies to face a tight supply of high-quality non-standard assets.

Huang Ming said: "We pay special attention to ABS, private REITs and REITs products as a supplementary strategy. Secondly, we focus on high-quality corporate bonds, especially in the transportation, utilities and other fields. These bonds with a maturity of 5 years and a credit rating of at least AAA have high long-term allocation value. At the same time, we also closely monitor the capital supplementary bonds issued by banks. It is expected that the supply of such bonds will increase in 2024 and become our key allocation object."

Huang Ming expects that the supply of capital supplementary bonds issued by banks will reach 1-1.5 trillion yuan in the next three years.

Regarding the equity market, Huang Ming said that it will continue to increase the allocation of undervalued, high dividend stocks, mainly focused on three areas: first, utilities companies with a good business model, stable profits and cash flow; second, upstream and midstream manufacturing companies with a good supply-demand structure and strong competitiveness; third, large consumer leading companies that are gradually entering a mature stage, and may increase cash dividends after a decrease in capital expenditure.

"These are all key allocations in the OCI portfolio. In the future, we will increase the proportion of stock allocation, hold it for the long term, stabilize the A-share market and reduce volatility," Huang Ming said.