CMB International: China Ping An (02318) and China Life Insurance (02628) are policy beneficiaries, and insurance stocks have an optimistic outlook for next year

The Zhitong Finance App learned that CMB International released a research report saying that the China Financial Supervisory Authority issued a “Notice on Adjusting Insurance Companies' Related Business Risk Factors” last Friday (5th), reducing the shareholding and solvency risk factors of insurance companies investing in the Shanghai and Shenzhen 300 Index component stocks, the China Securities Dividend Low Volatility 100 Index component stocks, and Science and Technology Innovation Board stocks by 10%. The bank predicts that Ping An of China (02318) and China Life (02628) will be the main beneficiaries of the policy; it remains optimistic about the outlook for the insurance industry in the 2026 fiscal year, maintains the sector's “outperforming the market” rating, and recommends buying Ping An of China, China Life Insurance (02328) and AIA (01299).

The policy marks continued efforts by regulators to guide insurance funds into the stock market since May. CMB International expects that if all of the minimum capital released is invested in the stock market, this relaxation of the rules could bring 102.6 billion yuan in incremental capital to the Shanghai and Shenzhen 300 markets. The bank assumes that the average allocation ratio of the insurance industry to the Shanghai and Shenzhen 300 Index, the low impact of China Securities dividends and the Science and Technology Innovation Board is 50%, 10%, and 5%. The minimum capital that can be released is 30.8 billion yuan without considering risk diversification effects; it also believes that the notice is more to guide insurance funds to long-term equity investment rather than simply improving the industry's comprehensive solvency adequacy ratio; it is estimated that by the end of September this year, the industry's comprehensive solvency could increase slightly by 1.14 percentage points to 187.4%.

CMB International said that the policy focuses on guiding long-term holdings of blue-chip stocks, high-dividend stocks and growth stocks, and clarifying regulatory support for insurance funds to invest in the Shanghai and Shenzhen 300 Index, the China Securities Low Volatility 100 Index, and the Science and Technology Innovation Board; it also believes that the highlight is to guide trillion-dollar insurance funds to hold long-term shares in the A-share market; at the same time, it is expected that after the adjustment, the capital efficiency of insurance funds investing in A-shares will exceed H shares.