On October 28, Caijing News (Reporter Wang Hong) With the continuous disclosure of quarterly reports by listed companies, the holding dynamics of insurance funds in the third quarter were also revealed. According to Wind data, as of now, insurance funds increased their holdings of 68 stocks and reduced their holdings of 73 stocks. The stocks that were increased mainly belong to industries such as computers and machinery, while the stocks that were reduced are mainly from the pharmaceuticals and electronics industries.

In addition, industries with relatively high increases in market value held by insurance funds include food & beverage, communication, and transportation industries, while industries with significant decreases in market value include coal and steel industries. Among them, Wonders Information had the highest increase in holdings proportion, belonging to the computer industry, while Baiyang Pharmaceutical had the highest decrease in holdings proportion. The stocks with the highest increase in market value held are Kweichow Moutai and China Telecom, while the stocks with the highest decrease in market value held are Yankuang Energy and Citic Pacific Special Steel Group.

Senior investment advisor Zhao Ling from Jufeng Investment Consulting told Caijing News that insurance funds have generally decreased their holdings of styles with strong high dividend trends this year and increased their holdings of some high-quality targets that have been persistently weaker than the market this year. Insurance funds switch positions between high and low positions of individual stocks to obtain returns from the mean reversion of individual stocks.

Baiyang Pharmaceutical, Yankuang Energy, and Citic Pacific Special Steel Group faced significant reductions in holdings.

Caijing News reporters noted that Baiyang Pharmaceutical, Yankuang Energy, and Citic Pacific Special Steel Group faced significant reductions in holdings in the third quarter.

Specifically, in the 2024 mid-year report of Baiyang Pharmaceutical, Taikang Life Insurance Co., Ltd. - Traditional - General Insurance Products, Taikang Life Insurance Co., Ltd. - Universal - Individual Universal Products, and Taikang Life Insurance Co., Ltd. - Dividend - Individual Dividend entered as the top ten circulating shareholders of the stock, with holdings of 3.4983 million shares, 3.2861 million shares, and 3.0044 million shares respectively. As of the end of the third quarter of 2024, the specific number of shares held by the insurance funds mentioned above in Baiyang Pharmaceutical was not detailed, but the overall number of shares held decreased by 9,283,839 shares.

As for Yankuang Energy, in the third quarter of 2024, the insurance funds completely exited the top ten circulating shareholders of Yankuang Energy, reducing the number of shares held from 39.9205 million shares to 0 shares, and the holding percentage from 0.88% to 0%.

Insiders say that the withdrawal of insurance funds may reflect concerns over the short-term performance decline of Yankuang Energy, as well as a cautious attitude towards the overall prospects of the coal industry. Although the coal industry remains in tight balance in the medium to long term, the market currently has a low willingness to hold positions in Yankuang Energy.

Regarding Citic Special Steel, China Life Insurance and New China Life Insurance both reduced their holdings in Citic Special Steel in the third quarter of 2024, with decreases in market cap, shareholding percentage, and holding quantity. Among them, China Life Insurance had a larger reduction, with a market cap decrease of 107.4425 million yuan, a shareholding percentage decrease of 0.16%, and a holding quantity decrease of 8.0023 million shares; New China Life Insurance had a relatively smaller reduction, with a market cap decrease of 32.5297 million yuan, a shareholding percentage decrease of 0.05%, and a holding quantity decrease of 2.4788 million shares.

Industry insiders believe that there may be some market fluctuations in the third quarter, and insurance funds may have reduced their holdings in Citic Special Steel out of risk management considerations.

Significantly increased shareholding in Kweichow Moutai and China Telecom.

Kweichow Moutai and China Telecom are currently the stocks with the highest increase in market cap held by insurance funds in the third quarter; insurance funds increased their holding market cap of Kweichow Moutai and China Telecom by 1.631 billion yuan and 12.61 billion yuan respectively in the third quarter.

As of September 30, 2024, insurance companies held 5.4723 million shares of Kweichow Moutai, an increase of 0.0647 million shares compared to the holding quantity of 5.4075 million shares on June 30, 2024.

Industry insiders say that the overall market sentiment improved in the third quarter, especially in the consumer sector, including the food and beverage industry favored by block orders. Data shows that on September 26, the food and beverage sector received a net inflow of 11.646 billion yuan from block orders. In addition, a series of steady growth policies in September lifted market confidence, especially in sectors with stable performance and high ROI, such as the baijiu industry, which is bullish.

Looking at Kweichow Moutai's performance, the stock price of Kweichow Moutai rebounded in the third quarter. On September 26, Kweichow Moutai's stock price approached the limit up, successfully regaining the 1500 yuan mark. Subsequently, Moutai's stock price consecutively broke through the 1300, 1400, 1500, and 1600 yuan integer marks, returning to a market cap of two trillion yuan.

"As long-term investors, insurance companies tend to prefer stocks with stable performance and high dividend yields, Kweichow Moutai meets the investment preferences of insurance companies; by increasing their shareholding in Kweichow Moutai, insurance companies can further diversify the portfolio risk," industry insiders said.

Caifinance reporters noted that in addition to insurance capital, Kweichow Moutai also received institutional shareholding in the third quarter. In the third quarter, several index funds such as ChinaAMC Shanghai A50 Exchange Traded Fund, Huatai-PineBridge CSI 300 ETF, and E Fund SZSE 300 ETF significantly increased their shareholding in Kweichow Moutai; the increased shareholding by index funds further enhanced the market attention and liquidity of Moutai.

By the end of the third quarter of 2024, insurance companies held 0.909 billion shares of China Telecom, compared to 0.786 billion shares in the mid-year report of 2024, an increase of 0.122 billion shares; in terms of market cap, by the end of the third quarter of 2024, insurance companies held 6.097 billion yuan worth of shares in China Telecom, compared to 4.836 billion yuan in the mid-year report of 2024, an increase of 1.261 billion yuan.

Caifinance reporters noted that by the end of the third quarter of 2024, China Telecom's closing price was 6.71 RMB, compared to 6.15 RMB at the mid-year report of 2024, showing a price increase. Industry experts said that insurance companies have increased their interest in investing in China Telecom, possibly due to their bullish outlook on its future development.

Switching between high and low positions for individual stocks.

From the current position adjustment of insurance capital in the third quarter, Zhao Ling believes that the adjustment of insurance capital is partly based on the high and low switching of stock prices, namely the mean reversion of excessive gains and losses, as well as the mean reversion of valuations.

"For example, Yankuang Energy rose by 11.55% in the first half of the year, with a peak increase of over 40%. Kweichow Moutai fell by 8.9% in the first half of the year, with a peak increase of less than 2.6%, while the overall market fell by 0.25% during the same period. At the end of the second quarter, Yankuang Energy's valuation percentile for the past decade was 80.99%, and Kweichow Moutai's valuation percentile for the past decade was 7.19%," Zhao Ling said.