This round of buying has increased Ping An's shareholding ratio in Industrial And Commercial Bank Of China Hong Kong stocks to 18%, and the shareholding ratios in CM BANK and Agricultural Bank Of China have also risen to over 15%. Analysis indicates that insurance funds are attracted to bank stocks due to their undervaluation and high dividend advantages, with the average dividend yield of Hong Kong Chinese banks exceeding 4%.
The inflow of insurance funds pushed the banking Sector to soar, with the Hong Kong Chinese bank Index reaching a seven-year high, and Agricultural Bank Of China and others reaching historic highs.
Ping An Insurance and other mainland insurance companies have significantly increased their shareholding in domestic large bank stocks, betting that high dividend yields will offset the adverse factors of narrowing banking sector profit margins and profit pressure.
On June 24, according to Bloomberg calculations based on Exchange data, Ping An Insurance has significantly increased its shareholding in several large banks listed in Hong Kong since the end of 2024, with a total holding size reaching 180 billion HKD (23 billion USD). This round of buying has raised its shareholding ratio in $ICBC (01398.HK)$Hong Kong stocks to 18%, in$CM BANK (03968.HK)$And$ABC (01288.HK)$The shareholding ratio has also risen to over 15%.
Analysis points out that Hong Kong bank stocks, with their low valuations and high dividend yields, provide a more attractive allocation choice for insurance capital. This trend also highlights the market's urgent demand for high-yield assets.
Under the concentrated inflow of insurance funds, the banking sector has continued to surge recently, and the index of Chinese-funded banks in Hong Kong has reached a seven-year high. $CITIC BANK (00998.HK)$Certain individual stocks have even reached historical highs. $ABC (01288.HK)$Tuesday's closing price also reached the highest level since its listing in 2010.
As of the time of writing, most Hong Kong Bank Stocks have risen. $BANK OF TIANJIN (01578.HK)$rising nearly 3%, $HSBC HOLDINGS (00005.HK)$、 $HANG SENG BANK (00011.HK)$up nearly 2%, $CM BANK (03968.HK)$Increased by more than 1%.
Insurance funds favor high dividend assets.
According to the Securities Times, on January 23 this year, Wu Qing, chairman of the China Securities Regulatory Commission, stated that he would guide large state-owned insurance companies to increase the scale and actual proportion of A-share investments, of which 30% of the newly added premiums each year from 2025 will be used to invest in A-shares.
In contrast, bank stocks traded in Hong Kong demonstrate greater attractiveness due to cheaper valuations and higher dividend yields. The average dividend yield of large state-owned banks listed in Hong Kong exceeds 4%, while the benchmark 10-year government bond yield is only 1.65%.
Yang Bo, the investment director of Qianhai Kaijin Fund in Shenzhen, stated: "The historically low valuations and high dividend payments make bank stocks an inevitable choice for long-term investors seeking dividend income or looking to establish defensive positions."
Ping An Insurance stated that the low volatility and high dividends of bank stocks will contribute to significant interest margin income. Ping An Insurance also pointed out:
It will adhere to a balanced investment strategy of growth stocks and high-dividend value stocks, while increasing non-bank stocks in the portfolio to diversify risk.
It is worth noting that Ping An Insurance is not the only insurance company to significantly buy bank stocks. Ruifa Insurance raised its stake in China CITIC Bank Corporation in Hong Kong from 4.98% to 5% this March. Xinhua Life Insurance acquired 5.45% of Bank Of Hangzhou from the Commonwealth Bank of Australia in January.
The buy-in from insurance funds has driven a significant rise in bank stocks.
This wave of buying has propelled the entire sector upward. China CITIC Bank Corporation, as one of the best-performing stocks this year, achieved a historical high, while Agricultural Bank Of China also closed at its highest point since its listing in 2010 on Tuesday.
Despite strong stock price performance, Chinese banks still face record-low profit margins and slow profit growth.
Yang Bo warned that although this momentum may continue in the short term, the sustainability of the rise in Bank stocks remains to be seen, as Banks are still dealing with issues such as shrinking profit margins and high funding costs.
"The performance of Stocks has deviated from the fundamentals of Banks, and we need to observe whether the expansion of Bank credit can be converted into real economic activity."
Editor/melody
