Insurance funds ramp up bets on equities

Driven by both policy incentives and potential healthy returns, insurance funds have shown heightened activity in the equities market. In 2025, such funds triggered mandatory stake disclosures in listed companies at their highest frequency since 2016.

Financial industry professionals expect insurance funds to further ramp up their equity exposure. Zhao Ran, an analyst at CSC Financial Co Ltd, said in a report that under pessimistic, neutral and optimistic scenarios, insurance funds' equity allocations in 2026 are projected to rise by approximately 968.1 billion yuan ($139 billion), 1.07 trillion yuan and 1.18 trillion yuan, respectively.

In recent years, financial regulators have stepped up efforts to support insurers' participation in the equity market by introducing a series of measures, including promoting long-cycle performance evaluation mechanisms, raising the upper limit on the allocation ratio of equity assets in insurance funds, and expanding channels for medium and long-term capital to enter the market.

Meanwhile, amid a low-interest-rate environment, increasing allocations to the equity market also reflect insurers' pursuit of yield flexibility and risk mitigation against interest spread losses, analysts said.

In terms of investment targets, bank-related shares have emerged as a key focus for insurance funds, as their low valuations and high dividend yields align well with insurers' preference for stability.

Ping An Life Insurance recently announced that Ping An Asset Management, acting on its behalf, invested in Hong Kong-listed shares (H shares) of Agricultural Bank of China. On Dec 30, its holdings exceeded 20 percent of the bank's H-share capital, triggering a mandatory disclosure requirement under Hong Kong market regulations.

In addition, Ping An Life increased its holdings of Postal Savings Bank of China's H shares in 2025, lifting its stake above 16 percent. The company also triggered stake disclosures in China Merchants Bank's H shares four times in 2025, with its shareholding exceeding 20 percent.

Excluding repeated disclosures by the same entity, insurance funds triggered stake disclosures 31 times in 2025. Including repeated disclosures, the number reached at least 38, second only to 2015, said a report released by Hua Chuang Securities on Jan 5.

Insurance funds showed a clear preference for H shares last year, triggering 26 disclosures in stocks characterized by low valuations and high dividend yields. Investments were mainly concentrated in the banking and utilities sectors, the report said.

Chen Haiye, an analyst at Hua Chuang Securities, said insurers' stakebuilding activities can generally be divided into two categories. One is dividend-driven, with a preference for counters offering relatively stable future dividend cash-flow expectations. The other is driven by return on equity considerations, favoring central and State-owned enterprises with mature profit models, which are incorporated as high-quality assets through long-term equity investments.

Referring to the full-year 2026, Chen said demand from both categories is likely to persist, and the wave of stakebuilding by insurance funds may continue.

Executives at Ping An Insurance (Group) Co of China said the company continues to focus on high-dividend, high-payout investment targets, while also actively seeking and deploying quality assets related to new quality productive forces.

Michael Guo Xiaotao, co-CEO and senior vice-president of Ping An Group, said at the company's 2025 interim results briefing that as borrowing costs continue to decline and asset allocation is further optimized, the company will dynamically balance high-dividend shares, value shares and growth shares to seize opportunities in the capital markets.

Yang Xiaotian, a researcher at Hualong Securities, said in a report that by moderately increasing equity investment ratios, insurers can enhance the elasticity of their returns. Long-term investments in high-ROE, high-dividend listed companies can generate more predictable dividend income and strengthen the safety buffer of net investment returns.