In Q3 2024, the non-banking financial institutions hold positions accounted for 2.01% (up by +0.73pct) in total, of which the insurance industry held a total of 1.16% (up by +0.56pct), the securities industry held a total of 0.64% (up by +0.23pct), and the diversified finance industry held a proportion of 0.20% (down by -0.06pct).
According to the Securities Times app, Huachuang Securities released research reports stating that in the third quarter, the non-banking financial fund holding positions increased significantly, with the insurance sector performance catalyzing a significant market rally, and the overall allocation to the securities and insurance industries. The crisis of interest rate spread in the life insurance industry has not been fundamentally resolved yet, but regulatory authorities actively guide the insurance industry to reduce liability costs; the dynamic adjustment mechanism of predetermined interest rates, as well as the encouragement of developing long-term dividend insurance, help improve the liability costs of the insurance industry to be more flexible and adaptable to market conditions. Most listed insurance companies still maintain a relatively cautious operational strategy, and with long-term interest rates not rapidly declining, liability costs remain within a controllable range.
Huachuang Securities' main views are as follows:
Data definition: Excluding index fund holding position data. Due to differences in disclosure granularity, all Q1 and Q3 choose heavy holdings data, while Q2 and Q4 choose all holdings data.
Overall industry: Significant increase in non-banking financial institutions' holding positions, with an increased allocation to insurance and securities.
Non-bank financial institution holdings accounted for 2.01% in Q3 2024 (up by +0.73pct), of which insurance industry holdings totaled 1.16% (up by +0.56pct), huaan csi all share investment banking & holdings totaled 0.64% (up by +0.23pct), diversified finance industry holdings accounted for 0.20% (down by -0.06pct).
Insurance industry: Overall increased allocation, with institutions focusing on increasing shareholdings in Ping An Insurance (02318,601318.SH) and China Pacific Insurance (02601,601601.SH).
From the perspective of individual stocks, in 2024Q3, Ping An and China Pacific Insurance saw the most significant increases in shareholding, with Ping An's total holdings increasing by 0.50% QoQ to 0.29%, and China Pacific Insurance's total holdings increasing by 0.45% QoQ to 0.23%. The bank believes that the increased positions in these two symbols may be driven by performance expectations and property policy surprises respectively. In addition, PICC P&C (02328) also increased its holdings slightly, up by 0.03% QoQ to 0.08%, and it is recommended to pay attention to the long-term investment value of PICC P&C.
The performance catalysts in the insurance sector during the third quarter have been significant, also benefiting from the outstanding performance of resilient varieties in the 924 market.
Looking at the mid-term performance, life insurance has benefited from improved value rates, achieving good growth in NBV; property insurance has been somewhat under pressure due to intensified natural disasters, but some insurers like Taiping General Insurance have still achieved COR optimization against the trend. On the investment side, benefiting from a low base, it is expected to enhance total investment returns by applying a high dividend strategy, with all listed insurers achieving positive net income in 2024H1 due to the low Q2 investment base.
Ranked by the year-on-year growth rate of attributable net profit in 2024H1: China Pacific Insurance +37.1%, PICC P&C +14.1%. New China Life Insurance +11.1%, Ping An Insurance +6.8%, China Life Insurance +5.9% (H-share comparable basis). After the release of the interim report at the end of August, the new round of interest rate cuts drove new business growth in life insurance, while the low base of the same period last year also contributed to positive profit expectations for the insurance sector in Q3. Following the start of the 924 market, the equity market quickly rebounded. Due to New China Life Insurance's highest proportion of TPL equity assets in net assets, it stands to benefit first from the resurgence of the equity market.
Investment advice:
In terms of life insurance, the bank first recommends China Pacific Insurance (02601, 601601.SH), which is transforming to continue empowering and possesses alpha effects, and China Life Insurance (02628, 601319.SH) with relatively less pressure on operations strategy documentation and liability costs. If the equity market further breaks through to the upside, it is recommended to focus on New China Life Insurance (01336, 601336.SH); if property policies continue to be validated, attention should be on Ping An Insurance (02318, 601318.SH). Regarding property insurance, there is a continued bullish outlook on the long-term investment value of PICC P&C (02328).
Risk Warning: Regulatory changes, reform falling short of expectations, exacerbated natural disasters, equity market volatility, and sustained downward pressure on long-term interest rates.
