According to a report from Caixin on March 17 (reporter Xia Shuyuan), insurance funds have become active in buying bank stocks again. The latest equity disclosure from the Hong Kong Stock Exchange shows that CM BANK (03968.HK) has recently been increased by The Cigna Group, which has purchased 9.3665 million shares at an average price of 47.5501 Hong Kong dollars per share, involving approximately 0.445 billion Hong Kong dollars. After the increase, the latest number of shares held by The Cigna Group is 0.461189 billion shares, and the shareholding ratio has risen from 9.84% to 10.04%.

According to statistics from Caixin reporters, as of now, 8 listed companies have been taken a stake by insurance funds in 2025. In addition to Sunshine Insurance taking a stake in CHINA RUYI's H shares, Great Wall Life taking a stake in DATANG RENEW, and CHINA WATER's H shares, the remaining 5 companies that have been taken a stake are all banks.

A person from the relevant business department of The Cigna Group stated to Caixin reporters that insurance funds favor bank stocks partly due to the significant advantages of dividend yields from bank stocks. In the context of long-end interest rate declines, dividend strategies can provide stable cash flow for insurance funds to some extent, compensating for the pressure of declining interest cash flow yields. On the other hand, under the new accounting standards, dividend symbols are more suitable for FVOCI measurement methods, where fair value fluctuations do not enter the income statement, but dividends can enter the profit and loss statement, playing the role of an earnings stabilizer.

Wang Xianshuang, chief analyst of the banking department at China Merchants, told Caixin reporters: 'Insurance funds frequently buy shares in state-owned banks in Hong Kong: on the one hand, investing in large banks offers both dividend income and anti-cyclical functions; on the other hand, investing in large banks further integrates into the systemic significance of our important financial institutions, achieving steady value growth for insurance capital while enhancing the systemic importance and stability of the institution itself.'

The Cigna Group and The Cigna Group take action one after another.

Since the beginning of the year, The Cigna Group has frequently been buying bank stocks, and has continued to increase its holdings after taking a stake, attracting market attention.

According to the latest equity disclosure from the Hong Kong Stock Exchange, on March 12, CM BANK (03968.HK) was increased by The Cigna Group, which purchased 9.3665 million shares at an average price of 47.5501 Hong Kong dollars per share, involving approximately 0.445 billion Hong Kong dollars.

After the shareholding increase, Ping An Asset Management's latest number of shares is 0.461189 billion, with the shareholding ratio increasing from 9.84% to 10.04%. According to Hong Kong market rules, this triggers a mandatory disclosure.

Coincidentally, on the same day, China CITIC Bank Corporation's H shares were also subject to a mandatory disclosure by insurance capital. On March 12, Ruizhong Life insurance increased its holdings by 3 million shares of China CITIC Bank Corporation's H shares, costing approximately 17.832 million Hong Kong dollars. After the increase, Ruizhong Insurance held 0.744 billion shares of China CITIC Bank Corporation's H shares as a "beneficial owner," surpassing 5% of the bank's H share capital, triggering a mandatory disclosure.

Among the 8 companies that have been subject to mandatory disclosure by insurance capital this year, 5 are bank stocks.

In fact, since the beginning of the year, bank stocks have frequently appeared on the list of cases where insurance capital has made mandatory disclosures.

According to a reporter from Caixun.com, as of now, 8 listed companies have been subject to mandatory disclosures by insurance capital in 2025. In addition to Sunshine Life disclosing CHINA RUYI's H shares, Great Wall Life disclosing DATANG RENEW, and CHINA WATER's H shares, 5 of the companies subject to mandatory disclosure are banks.

For example, on January 8, Ping An Life's holdings in Postal Savings Bank Of China's H shares exceeded 5% of the bank's H share capital, triggering a mandatory disclosure. As of March 10, the shareholding ratio has exceeded 8%, and based on the average transaction price in the range, the total cost of the increase has exceeded 3 billion Hong Kong dollars.

On January 10, Ping An Life's holdings in CM BANK's H shares exceeded 5% of the bank's H share capital, triggering a mandatory disclosure. As of March 6, the shareholding ratio has exceeded 9%, and based on the average transaction price in the range, the total cost of the increase is approximately 8.2 billion Hong Kong dollars.

On February 17, Ping An Life increased its holdings of Agricultural Bank Of China H shares by 47.723 million shares, at an average price of 4.5116 Hong Kong dollars per share, involving funds of 0.215 billion Hong Kong dollars. After the increase, the latest number of shares held is 1.539 billion, with the shareholding ratio rising from 4.85% to 5%, triggering a mandatory disclosure. By March 4, its shareholding ratio had exceeded 7%, and based on the average transaction price in the range, the total cost of the increase is approximately 3.2 billion Hong Kong dollars.

New China Life Insurance acquired 0.33 billion shares of Bank Of Hangzhou held by Australia and New Zealand Banking Group through an agreement transfer on January 24 this year, with a transfer price of 4.317 billion yuan. After this acquisition, New China Life Insurance will hold 5.87% equity in the bank.

Large banks listed in Hong Kong are favored: low cost, strong anti-cyclic ability.

Industry insiders believe that the frequent buying of state-owned large banks by insurance funds, especially large banks listed in Hong Kong, is a comprehensive consideration by insurance companies based on factors such as dividend yield, tax advantages, and anti-cyclical characteristics amid a scarcity of assets.

"The balance of insurance funds continues to grow, but there is continued pressure for reallocation of high-yield assets upon maturity. Against this backdrop, bank stocks with stable dividends and high dividend yields have the property of replacing high-yield non-standard assets," said Wang Xianshuang.

A bond fund manager from a Shanghai public fund also analyzed for the reporter that by 2025, many insurance funds will increase their allocation to bank stocks, with the main trading logic still being high dividend stocks.

According to data, as of the end of 2024, the balance of insurance fund utilization was 33.26 trillion yuan, a year-on-year increase of 15.08%. However, in terms of asset allocation, high-yield non-standard assets such as urban investment and real estate, which were invested before 2018, are gradually maturing, and high-yield non-standard assets are becoming increasingly scarce under the background of urban investment debt consolidation. As of the end of 2024, the proportion of non-standard and other assets in insurance investments was 28.7%, down 11.5 percentage points from 40.2% at the end of 2017.

In addition, from the perspective of the banks themselves, the dividend yield advantage of bank stocks is significant. According to statistics compiled by the reporter, by the end of February, only three A-share bank targets had a yield below 3%, with an average dividend yield of 5.76%. The highest was Chongqing Rural Commercial Bank at 8.53%. For H-share banks, only four targets had a yield below 3%, with an average dividend yield as high as 7.17%, which was 1.41 percentage points higher than A-shares, with the highest being Chongqing Rural Commercial Bank at 10.78%. Looking at the sub-categories within banks, A-share state-owned large banks have a dividend yield between 7.5% and 8%, joint-stock banks have yields between 3% and 8.5%, city commercial banks range from 0% to 8.5%, and rural commercial banks range from 3% to 8.5%.

It is worth noting that the dividend yield of state-owned large banks listed in Hong Kong is significantly higher than that of the corresponding banks in A-shares. According to calculations by the team of Wang Xianshuang from China Merchants Securities, as of February 27, 2025, the average dynamic dividend yield of the six major state-owned banks' H-shares was 5.71%, which was 1.02 percentage points higher than the average dynamic dividend yield of 4.69% for corresponding banks in A-shares.

A representative from China Merchants The Cigna Group Investment Banking Department told reporters from the Financial Associated Press: "The dividend income from H Shares held by insurance companies for more than 12 months can be exempt from corporate income tax, and this tax advantage allows insurance funds to further amplify the benefit of high dividend yields when investing in Hong Kong stocks."

"Overall, investing in major insurance companies not only provides dividend income but also has a counter-cyclical function. On the other hand, the six major banks are all systemically important banks, and the probability of encountering micro credit risks is extremely low, exhibiting strong risk resistance. Investing in major banks can further integrate into our systemic important financial institution system, while achieve the stable appreciation of insurance funds and enhance the systemic importance and stability of their own institutions," said Wang Xianshuang.