Optimistic Long-term Investment Value in the Market
The landscape of insurance investment has seen a significant uptick in activity throughout 2023, signaling a proactive approach towards understanding market dynamics and enhancing decision-making processes. By December 2nd, a recorded 196 insurance institutions had conducted over 20,000 research meetings with 1,911 listed companies. The surge in both the frequency of these consultations and the overall density reflects a departure from previous years, indicating a more vigorous strategy being employed by these entities as they navigate the complex investment terrain.At the heart of these initiatives is a critical analysis of emerging sectors and enterprise performance, serving as a preliminary step in formulating sound investment strategies. Recently, a symposium convened over 80 experts, including regulatory personnel, insurance company representatives, and asset management professionals, all deliberating the outlook for insurance fund utilization through to 2025. This session not only assessed industry challenges and opportunities but also devised frameworks that align with the shifting landscape.The consensus among professionals suggests that a balanced approach would dominate insurance investment strategies heading into 2025. The primary philosophy is to ensure that foundational investments are stable while simultaneously optimizing the allocation to riskier assets. On one front, equity investments are encouraged to adopt a diversified strategy, with a keen focus on maintaining a balanced style. There’s also an emphasis on capturing the right timing with high-dividend stocks, recognizing their importance in a low-interest rate environment.Insurance institutions are particularly diligent in their pre-investment research, seeing it as a cornerstone of their acquisition strategy. An investment manager from an asset management firm noted that before committing substantial funds to any stock, a comprehensive analysis of the entire industry chain is usually conducted, which often involves multiple rounds of consultation to substantiate the investment's value. Consequently, the extent of research undertaken serves as an essential indicator of how insurance funds plan to allocate their investments across various stocks.Among these institutions, Taikang Asset has emerged as a prominent player, amassing an extraordinary 1,161 research sessions with 681 listed companies this year alone. Such frequency indicates a robust mechanism within the firm aimed at continuous engagement with the market. This level of commitment from Taikang Asset is indicative of a broader trend observed among leading insurance firms, many of which have instituted regular research practices to ensure informed decision-making.In total, data reveals that 12 insurance entities have surpassed 500 research engagements in 2023, including notable firms such as China Life Asset Management and Great Wall Asset Management. Such extensive research efforts arise not only from a responsibility to their own insurance funds but also from obligations to manage third-party institutional investments, thereby amplifying the scrutiny under which these funds operate.The sectors capturing the most attention from insurance institutions include information technology, electrical equipment, communication, electronic components, industrial machinery, and medical infrastructure. For instance, the industrial automation provider, Zhongkong Technology, has welcomed inquiries from 96 different insurance firms over the past year, highlighting the intense interest from these investment bodies.The backdrop of a rejuvenated capital market, bolstered by a suite of positive policy initiatives, has set the stage for an expansion of investment opportunities. Many within the insurance investment community are noting a greater prevalence of structural opportunities within the stock market, underscoring the importance of strategic allocation in the medium to long term.In terms of concrete strategies, the drive to increase holdings in high-dividend stocks is on the rise, resonating widely among equity investment leaders in the insurance sector. One asset manager elucidated this point by stating that high-dividend equities can be measured under the fair value model, thereby mitigating volatility impacts on current net profits. This stability is crucial for insurance companies as they navigate the complexities of fluctuating market conditions.Simultaneously, there is a notable interest in growth-oriented strategies that align with technological advancements and new production capabilities. Reports from CITIC Securities’ non-bank team suggest that growth strategies promise ample revenue potential. Balancing these strategies with high-dividend investments can diversify their equity portfolios, enhancing long-term returns while also bolstering the robustness of those returns.Leadership voices within China Life assert a sustained commitment to prudently increasing investments in quality high-dividend stocks. There is an ongoing emphasis on maintaining proper timing within these investments and ensuring a strong margin of safety. Key focal points include companies renowned for consistent performance, solid governance, attractive market valuations, and high dividend yields—all characteristics typically associated with industry leaders. Through diversified strategies and robust active management, insurance firms aim to enhance their long-term equity returns.