Recently, the National Financial Regulatory Administration issued the "Notice on Adjusting Risk Factors for Insurers' Related Businesses." The notice stated that to effectively mitigate risks, guide insurers to enhance long-term investment management capabilities, strengthen asset-liability matching, and better leverage insurance funds as patient capital to serve the real economy, it is necessary to refine solvency-related standards and promote sustainable and stable operations for insurers.
In response, former chief economist of a securities firm Li Daxiao commented that this move holds significant importance for fostering the long-term healthy development of China's stock market. It brings substantial incremental long-term capital, fulfilling a long-awaited policy demand and representing a genuinely major positive. The Chinese stock market is expected to react very positively.
As of the end of Q2 2025, insurance fund utilization stood at 36.23 trillion yuan, up 17.4% year-on-year, making it a relatively large incremental funding source for China's stock market. Moreover, due to the long-term nature of insurance funds, they serve as a natural source of long-term capital, playing a crucial role in stabilizing the stock market. However, obstacles to insurance funds entering the market have objectively existed, slowing down their participation and enthusiasm.
In particular, lowering risk factors for insurers' related businesses means insurers' capital efficiency can be effectively improved, allowing them to allocate more funds to the capital market and further expanding opportunities for insurance funds to enter the market.
Additionally, a notice issued in September 2023 required insurers to strengthen long-term performance assessments of investment returns and disclose the three-year average investment return rate and comprehensive investment return rate in solvency quarterly reports. This will further reinforce long-term investment orientation, effectively increasing demand for high-quality core assets over the long term and reducing short-term volatility in the stock market.
From an operational perspective, most retail investors are still unfamiliar with insurance fund strategies and are advised against taking opposing positions. It is recommended to study and learn more about insurance fund participation in the market.
Li Daxiao's disclaimer: Wealth management involves risks; investment requires caution. Personal views are for reference only and do not constitute investment advice. Investors bear their own operational risks.