Once again, there are reports of risky capital taking a stake.

On December 31, 2024, Ping An Life announced that it had entrusted Ping An Asset Management to invest in $ICBC (01398.HK)$ The Stocks reached 15% of the Industrial And Commercial Bank Of China H shares on December 20, 2024, triggering the shareholding actions of Ping An Insurance according to Hong Kong market rules.

According to a reporter from Brokerage China, in addition to the above operations, Ping An Asset Management, in the role of "investment manager," continuously increased its holdings of two bank stocks in mid-December, which are Postal Savings Bank Of China and China Construction Bank Corporation, both of which are H shares.

Taking a stake in Industrial And Commercial Bank Of China H-shares.

According to data disclosed by the Hong Kong Stock Exchange, Ping An Life bought 45 million shares on December 20 at an average price of 4.8718 Hong Kong dollars per share, resulting in a shareholding ratio of 15%. On the same day, Ping An Group also purchased Industrial And Commercial Bank Of China H-shares through other subsidiaries, with a total acquisition of 0.107 billion shares at a cost of 0.522 billion Hong Kong dollars, increasing the shareholding ratio to 15.11%.

In fact, since 2024, Ping An has increased its holdings of Industrial And Commercial Bank Of China H-shares multiple times, with purchases in June and August. After Ping An Group and Ping An Life consecutively increased their holdings on August 23, Ping An's shareholding ratio in Industrial And Commercial Bank Of China H-shares rose to 14%.

This stake acquisition was made by Ping An Asset Management through competitive trading, funded by the insurance liability reserves of Ping An Life Insurance. Ping An Asset Management is the trustee for Ping An Life Insurance and is controlled by the same major shareholder, Ping An Insurance Group of China.

As of December 20, 2024, the book balance of shares of the Industrial And Commercial Bank Of China H-shares held by Ping An Life Insurance has reached 58.321 billion yuan, accounting for 1.26% of its total assets at the end of the third quarter of 2024.

As of September 30, 2024, Ping An Life Insurance had total assets of 4.83 trillion yuan, net assets of 317.613 billion yuan, and a comprehensive solvency adequacy ratio of 200.45%; the book balance of the company's equity assets was 885.9 billion yuan, accounting for 19.81% of total assets at the end of the third quarter of 2024.

The H-shares of Banks have been continuously increased.

In addition to the H-shares of the Industrial And Commercial Bank Of China being acquired, the H-shares of Postal Savings Bank Of China and China Construction Bank Corporation have also been significantly increased by funds recently.

According to information disclosed by the Hong Kong Stock Exchange, Ping An Asset Management increased its shareholding by 3.5 million shares on December 24 through the market, costing approximately 16.4 million Hong Kong dollars. $PSBC (01658.HK)$ Shares were purchased at a cost of approximately 16.4 million Hong Kong dollars. After this increase in shareholding, Ping An Insurance Asset Management, as an "investment manager", holds a total of 0.99425 billion H shares of Postal Savings Bank Of China, accounting for 5.00% of the total H shares of the bank and over 1% of the bank's total share capital.

Additionally, Ping An Asset Management increased its shareholding by 67.255 million shares in China Construction Bank on December 18, spending about 0.424 billion Hong Kong dollars. $CCB (00939.HK)$ After this increase, Ping An Asset Management, as the investment manager, holds 12.054 billion shares of the H-shares of China Construction Bank, accounting for 5.01% of the total H-shares of the bank, and 4.82% of the bank's total share capital.

The reason insurance companies increased their holdings in H-shares of banks may be due to factors such as low valuations in the Hong Kong stock market, high dividend strategies, and the stability of Earnings Reports. The dividend yield of bank stocks in the Hong Kong stock market is generally high; according to the latest closing data, the dividend yield of ICBC H-shares reached 6.44%, and that of China Construction Bank H-shares reached 6.77%.

On the evening of December 30, the Industrial And Commercial Bank Of China announced that it plans to distribute a semi-annual cash dividend of 0.1434 yuan per share (inclusive of tax), with a total cash dividend distribution of approximately 51.109 billion yuan. Among this, the cash dividend for A-shares amounts to approximately 38.662 billion yuan.

Since the beginning of 2024, the high dividend strategy has received continuous attention in the market, with the higher dividend yield and extremely low valuations of bank stocks becoming the preferred choice for funds. Driven by multiple factors, the bank stock market has welcomed a significant upward trend in 2024.

According to Wind Statistics, nearly all A-share banks have recorded gains since 2024, with the annual increase in the banking sector (weighted by total market capitalization) reaching 46.67%, ranking first among the first-level industries of Shenwan. Specifically, 11 banks have risen over 50%, with Bank of Shanghai, Shanghai Rural Commercial Bank, Shanghai Pudong Development Bank, and Bank Of Chengdu seeing increases of over 60%. The banking sector on the Hong Kong Stock Exchange has also performed well, with an increase of 61.02% (weighted by total market capitalization) in 2024.

Insurance capital's shareholding has reached a new high.

Buying through the secondary market and frequently triggering the 5% shareholding threshold is a major characteristic of Insurance funds' investment in 2024, with several companies making multiple announcements. According to the China Insurance Industry Association, as of now, the number of shareholding announcements by insurance funds has reached 20 times throughout the year, a new high in nearly four years, with 7 occurrences since November alone.

Industry insiders analyze that, as representatives of medium to long-term funds, insurance funds frequently triggering shareholding announcements in 2024 is partly in response to the call for medium to long-term funds to enter the market, and is also related to the implementation of new financial instrument standards and the continuous decline of interest rates. By increasing investments in high-dividend individual stocks and expanding the scale of long-term private equity investments, this is beneficial for promoting more stable returns and financial statements.

A person in charge of an insurance asset management company told Brokerage China reporters that high-dividend assets are an important investment direction for insurance funds. In early October 2024, when market sentiment was high, the company increased its allocation to quality high-dividend stocks in the Hong Kong market, further expanding its long-term Stocks holdings.

This person also believes that not all high-dividend assets are suitable symbols. The long-term allocation of insurance funds to high-dividend assets needs to emphasize two aspects: first, high dividends should be based on high profitability and have a certain degree of sustainability, so the profitability quality of listed companies needs to be relatively high with sustainable earnings. It is necessary to consider the company's profitability (ROE, net margin, etc.) level and its sustainability rather than simply looking at the dividend yield. Secondly, the cost of buying high-dividend assets should not be too high. If the buying cost is too high, it will reduce the dividend yield level, and there will also be a loss from a potential price correction in the future.

Kaiyuan Securities analyzes that the frequent triggering of shareholdings by insurance funds reflects the trend of life insurance companies enhancing net investment returns by increasing their holdings in mature industries with stable operations and continuous dividends in a low-interest-rate environment. It is expected that the shares held above the 5% threshold will mainly be accounted for in the OCI stock category.

Changjiang Securities analyzes that the recent increase in insurance fund shareholding announcements since 2023 is related to the current overall environment where long-term bond yields continue to decline and high-yield projects such as non-standard investments are reduced, amid an 'asset shortage' background. The purpose of making multiple shareholding announcements may be to fill the gap caused by the decline in interest rate returns and to smooth the impact of the interest rate decline cycle. In addition, starting in 2023, some insurance companies are implementing the new accounting standard IFRS 9. According to IFRS 9, stocks with over 5% ownership that lead to obtaining board seats can be classified as long-term private equity investments using the equity method for accounting, which only affects total assets and does not impact the income statement and investment returns, thus having important significance for smoothing insurance statements and investment returns.

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