Insurance capital continues to take stakes without pause!

According to the latest information from the Hong Kong Stock Exchange, 瑞众保险 increased its holdings by 3 million shares on March 12.$China CITIC Bank Corporation (601998.SH)$After the H-shares, it reached 5% of the bank's H-shares capital on the same day, triggering a stake acquisition according to Hong Kong market rules.

As of now, 7 listed companies have been targeted by insurance capital this year, of which 5 are banks, including: China CITIC Bank Corporation,$PSBC (01658.HK)$、 $CM BANK (03968.HK)$ 、$ABC (01288.HK)$、$Bank Of Hangzhou (600926.SH)$Industry analysis indicates that due to multiple factors, the allocation ratio of insurance funds to equity assets, especially dividend assets, is in an upward trend. In this context, when insurance companies consider increasing allocation to equity assets, stable high-dividend stocks like bank stocks are very important investment symbols.

瑞众 Insurance raised its stake in China CITIC Bank Corporation Listed in Hong Kong.

According to information disclosed by the Hong Kong Stock Exchange, on March 12, 瑞众 Insurance increased its stake by 3 million shares of China CITIC Bank Corporation Listed in Hong Kong, costing approximately 17.832 million Hong Kong dollars.

After the increase, 瑞众 Insurance holds 0.744 billion shares of China CITIC Bank Corporation Listed in Hong Kong as a 'beneficial owner', accounting for over 5% of the bank's H-share capital, triggering a disclosure under Hong Kong market rules.

Previously, China CITIC Bank Corporation disclosed its performance report for 2024 in mid-January, showing that last year the bank achieved a revenue of 213.65 billion yuan and a Net income of 68.58 billion yuan, an increase of 3.8% and 2.3% year-on-year, respectively. As of the end of last year, the bank's asset size exceeded 9.53 trillion yuan, with the non-performing loan ratio decreasing to the lowest level in nearly a decade.

According to Statistics, since the beginning of 2024, the share price of China CITIC Bank Corporation Listed in Hong Kong has accumulated an increase of nearly 90%, ranking among the top three of Listed in Hong Kong banks. As of the close on March 14 of this year, the bank's Listed in Hong Kong share price was 6.21 Hong Kong dollars, and the latest market value of Ruichong Insurance's holdings exceeded 4.6 billion Hong Kong dollars.

It is worth mentioning that Ruichong Insurance had disclosed its holdings in July and August of 2024.$CHINA LONGYUAN (00916.HK)$Listed in Hong Kong,$CTG DUTY-FREE (01880.HK)$Listed in Hong Kong, with the shareholding ratio reaching 5% of the total capital of the two companies' Listed in Hong Kong. Among them, the shares of CHINA LONGYUAN Held by it broke through 15% of the latter's Listed in Hong Kong capital on December 20 of last year.

According to the official website, Ruichong Insurance was approved to commence operations in June 2023, with a registered capital of 56.5 billion yuan, and is headquartered in Peking. In November 2023, the Peking Financial Regulatory Bureau approved the arrangement for the transfer of insurance business between Ruichong Insurance and Huaxia Life, with the latter's business being fully taken over by Ruichong Insurance.

Public information shows that as of the end of June 2024, HUAXIA LIFE holds a total of 4.9% equity in Industrial Bank, and has dispatched a Director to the bank. Among them, the 2.74% equity originally directly held by "HUAXIA LIFE - Self-owned Funds" has been changed to be held by "Ruizhong Insurance - Self-owned Funds".

In addition, at the end of 2023 and the end of March 2024, HUAXIA LIFE also held$MINSHENG BANK (01988.HK)$2.96% equity and 0.07% equity in China Construction Bank, but the names "HUAXIA LIFE" and "Ruizhong Insurance" have not appeared among the top ten shareholders of these two banks since then.

The seventh case this year.

According to statistics from brokerage reporters in China, as of now, there have been 7 listed companies in 2025 targeted by insurance capital. In addition to Sunshine Life targeting$CHINA RUYI (00136.HK)$H Shares and Great Wall Life targeting CHINA WATER H Shares, five of these targeted companies are banks.

Among them, the "Ping An system" represented by Ping An Life frequently buys bank stocks and continues to increase its shareholding after the initial acquisition, attracting market attention. Including:

On January 8, the number of H shares held by Ping An Life in Postal Savings Bank of China exceeded 5% of the bank's H share capital, triggering a shareholding notice. By March 10, its shareholding percentage had surpassed 8%, with a total investment of over 3 billion Hong Kong dollars based on the average transaction price within the range.

On January 10, the number of H shares held by Ping An Life in CM BANK exceeded 5% of the bank's H share capital, triggering a shareholding notice. By March 6, its shareholding percentage had surpassed 9%, with a total investment of approximately 8.2 billion Hong Kong dollars based on the average transaction price within the range.

On February 17, the number of H shares held by Ping An Life in Agricultural Bank Of China exceeded 5% of the bank's H share capital, triggering a shareholding notice. By March 4, its shareholding percentage had surpassed 7%, with a total investment of approximately 3.2 billion Hong Kong dollars based on the average transaction price within the range.

Earlier, on December 20 of last year, Ping An Life triggered a notice by holding H shares of Industrial And Commercial Bank Of China, with the number of H shares held exceeding 15% of the total. By February 12 of this year, its shareholding percentage had surpassed 17%, with a total investment of nearly 10 billion Hong Kong dollars based on the average transaction price within the range.

Additionally, Ping An Group increased its holdings by 67.703 million shares of China Construction Bank Corporation's H shares on December 18 of last year, holding a total of 12.039 billion shares, which exceeded 5% of the bank's total H shares. Among them, Ping An Life directly holds 11.224 billion shares of China Construction Bank Corporation's H shares, just a step away from the 5% acquisition threshold.

$NCI (01336.HK)$On January 24 of this year, through an agreement transfer, acquired 0.33 billion shares of Bank Of Hangzhou held by Australia Commonwealth Bank, with a transfer price of 4.317 billion yuan. After the completion of this acquisition, New China Life Insurance will hold 5.87% equity in the bank.

The wave of shareholding initiatives is rising.

Continuing to increase holdings in bank stocks is also a continuation of the wave of shareholding initiatives by insurance funds last year. According to the China Insurance Industry Association, insurance funds initiated shareholding 20 times last year, reaching a four-year high.

Industry insiders analyze that as representatives of medium- to long-term funds, the frequent shareholding initiatives by insurance funds are for two reasons: first, to respond to the call for medium- to long-term funds to enter the market; second, to reduce the impact of fluctuations in financial assets on profits after the implementation of the new financial instrument guidelines by increasing investments in high-dividend stocks and expanding the scale of long-term Private Equity, which is conducive to smoothing income and financial statement fluctuations; and third, to address the asset-liability matching and reinvestment pressure brought about by declining interest rates.

Changjiang Securities' research reports believe that the purpose of multiple shareholding initiatives may be to offset the losses from declining interest income and to smooth the impact of the interest rate decline cycle. In addition, starting in 2023, some insurance companies will implement new accounting standards, IFRS 9. According to IFRS 9, stocks that have over 5% ownership and obtain board seats can be classified as long-term Private Equity, accounted for using the equity method, affecting only the total assets but not the profit and loss statement or investment income, which is significant for smoothing insurance financial statements and investment returns.

Under the influence of multiple factors, the allocation ratio of insurance funds for equity assets, especially dividend assets, is on the rise. In this context, when considering increasing allocations of equity assets, bank stocks, as stable growth high-dividend stocks, are very important target symbols for allocation. In addition to the investment demand from the funding side, the prospects for the synergy between banks and insurance on the liability side also provide more possibilities for insurance funds to invest in banks.

For example, after New China Life Insurance initiated shareholding in Bank of Hangzhou, it expressed that the company is bullish on the long-term development prospects of China's banking industry and Bank of Hangzhou. By investing in Bank of Hangzhou, New China Life Insurance can optimize its asset allocation through dividend assets, increase its long-term Private Equity base assets, promote synergy in the bank-insurance business, enhance the company's competitive edge and risk resistance in the financial services sector, and further elevate financial institutions' ability to serve the real economy, fully supporting the integrated development of the CNI Yangtze Index region.

Editor/rice