Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.

Author: Yang Qingwan

Since the beginning of this year, the frequency of insurance capital acquiring stakes in listed companies has significantly increased. Last week$NCI (01336.HK)$shareholding$SH PHARMA (02607.HK)$And.$China National Medicines Corporation (600511.SH)$This constitutes the first stake increase (holding over 5%), previously, companies like Ruizhong Life Insurance and Great Wall Life Insurance have also frequently increased stakes in companies listed in Hong Kong and A-shares.

Currently, there are quite a few instances where insurance shareholders hold more than 5% of the circulating shares of listed companies; in addition to some being unlocked restricted shares, there have also been many shareholdings and new stake increases this year, with at least 14 stake increases occurring. According to incomplete statistics from reporters, as of the end of the third quarter, there were appearances of insurance assets among the top ten circulating shareholders of over 47 A-share listed companies.

From the perspective of stake increases and heavily held circulating shares, industries such as transportation, banks, real estate, construction, and public utilities are the most favored by insurance companies. Especially driven by new financial instrument standards and pressure from interest spread losses, insurance capital is more focused on investing in high-dividend assets.

This year, there have been more than 14 stake increases by insurance capital.

Just last week,$Shanghai Pharmaceuticals Holding (601607.SH)$Announced with China National Medicines Corporation, received$New China Life Insurance (601336.SH)$Increased shareholding and received a notice. After the relevant change in equity, new china life insurance and new china life assets collectively hold 38.2462 million shares of china national medicines corporation, accounting for approximately 5.07% of the total share capital of the listed company; holding 0.149 billion shares of sh pharma A shares and 37.8959 million H shares, accounting for approximately 5.05% of the total share capital of the listed company.

Since the beginning of this year, insurance capital has made notifications to at least 14 listed companies in A shares and Hong Kong stocks, far exceeding the past three years. Among them, Great Wall Life Insurance and Ruizhong Life Insurance have been the most frequent in this activity, with Great Wall Life Insurance making notifications this year.$Wuxi Rural Commercial Bank (600908.SH)$、$CEVIA Enviro Inc. (000885.SZ)$、$Jiangsu Jiangnan Water (601199.SH)$、$Jiangxi Ganyue Expressway (600269.SH)$、$DYNAGREEN ENV (01330.HK)$and the company, ruizhong life insurance also took a stake.$CHINA LONGYUAN (00916.HK)$、$CTG DUTY-FREE (01880.HK)$etc.

On October 22, China Postal Insurance holds $ANHUIEXPRESSWAY (00995.HK)$ 24.828 million H shares, accounting for approximately 5.04%. $CPIC (02601.HK)$ Subsidiaries' funds have taken positions. $HUANENG POWER (00902.HK)$ 、 $HUADIAN POWER (01071.HK)$ According to documents filed with the U.S. Securities and Exchange Commission (SEC), some of the most prominent actions Third Point took in the second quarter, respectively, were to establish positions, shareholding of and more.

In the third quarter, there was increased investment in new stocks.

According to WIND data, the proportion of circulating shares held by insurance funds shareholders in listed companies has exceeded 5% in many cases, some of which are from restricted share unlocks, for example, china pacific insurance holds.$Shanghai Rural Commercial Bank (601825.SH)$5.81% of the equity; there are also cases of long-term holdings exceeding 5% and board members dispatched, such as.$CHINA LIFE (02628.HK)$Traditional accounts hold.$CHINA UNICOM (00762.HK)$10.3% shareholding.

According to incomplete statistics from reporters, by the end of the third quarter, insurance funds appeared among the top ten circulating shareholders of more than 47 listed companies in the A-share market. In the third quarter, insurance funds significantly increased shareholding or entered individual stocks, such as$CHINA TELECOM (00728.HK)$、$China Petroleum & Chemical Corporation (600028.SH)$、$Wonders Information (300168.SZ)$and others received$China Life Insurance (601628.SH)$the shareholding.

Taking the shareholding details of the traditional account of china life insurance as an example, this insurance account newly entered 24 stocks in the third quarter, among which the ones with the largest market cap include$China Merchants Expressway Network & Technology Holdings (001965.SZ)$、$XCMG Construction Machinery (000425.SZ)$、$ENN Natural Gas (600803.SH)$、$Xj Electric Co.,ltd. (000400.SZ)$、$China Merchants Energy Shipping (601872.SH)$Among them, those who entered the top ten circulating stock shareholders and hold more than 2% of shares include$Biem.L.Fdlkk Garment (002832.SZ)$, those who hold more than 1% include$Guangdong Provincial Expressway Development (000429.SZ)$China merchants expressway network technology holdings, xcmg construction machinery,$Henan Pinggao Electric (600312.SH)$、$Tangshan Port Group (601000.SH)$、$Jiangxi Jovo Energy (605090.SH)$、$Xi’an Novastar Tech (301589.SZ)$etc.

From the perspective of industry distribution, public utilities, banks, transportation and other industries with relatively stable performance and high dividend rates are more favored. Real estate, construction and other industries are still in the stock pool of insurance funds, but there are some disagreements in the operation of bank stocks in the third quarter, and some insurance funds choose to take profits and reduce their shareholding. $PSBC (01658.HK)$、 $BANK OF CHINA (03988.HK)$ And reduce part of their holdings.

Two main reasons for favoring dividend stocks.

From the situation of large shareholding and circulation stocks, insurance funds still prefer investments in dividend assets that are suitable for long-term holding, have stable performance, and high dividend yields, especially under the influence of the new financial instruments guidelines and interest spread loss pressures.

The preference of insurance funds for dividend stocks has a long history, mainly due to the significant decline in the yield of reinvested fixed income assets after maturity as interest rates decrease. Insurance companies need to cope with the pressure of interest margin losses, and high dividend yield dividends may provide higher returns than government bond yields. By significantly increasing dividend income, it effectively buffers the decline in net investment income.

This year, insurance funds have frequently raised their stakes, mainly influenced by the new financial instrument standards. On one hand, dividend income can be included in net income, while the differences from buying and selling financial assets are recorded in other comprehensive income. To reduce the impact of market fluctuations on net income, it is necessary to optimize the investment structure of equity assets and increase long-term holdings of dividend assets.

On the other hand, under the new financial instrument measurement standards, raising stakes means holding more than 5% of the shares, which can influence the listed company. There may be a hope of including this as other equity instruments (FVOCI equity instruments) and even possibly classifying the investment as long-term equity investment after the insurance company appoints a director, which is beneficial for consolidating the stable income contribution of equity investments.

Editor/Rocky