Guosheng Securities released a research report stating that current policies are clearly driving insurance capital to increase allocations in the stock market, with accelerated inflows this year and notable growth in Q3 holdings. The report analyzed insurers' preferences in the construction sector, favoring high ROE, high dividend yield, and undervalued stocks (top holdings include Power Construction Corp of China, China State Construction Engineering, and Sichuan Road & Bridge). Sichuan Road & Bridge recently saw a 5% stake increase by China Post Life Insurance, signaling continued interest in such stocks. The firm estimates that by 2026, the construction sector could attract an additional RMB 28.6 billion from insurers, accounting for 3.5% of free-float market capitalization. Key A-share recommendations include Sichuan Road & Bridge, Jianghe Group, Jinggong Steel, Sinoma International, Sanwei Chemical, China State Construction Engineering, and Anhui Construction Engineering, all with expected 2026 dividend yields exceeding 5%. For H-shares, China State Construction International, China Communications Construction, China Railway Construction, Sinopec Engineering, and Chow Tai Fook Enterprises are highlighted. With global computing demand surging due to AI development, semiconductor cleanroom leaders like AsiaICEP, Sheng Hui Integration, and BoCheng Technology are also recommended. Additionally, undervalued steel structure leader Honglu Steel Structure is worth monitoring.

Key takeaways from Guosheng Securities: 1. Insurance capital is accelerating market entry, with policies like the "Implementation Plan for Promoting Medium- to Long-Term Capital Inflows" and relaxed risk factor rules for insurers driving equity allocations. By Q3 2025, insurance funds reached RMB 37.5 trillion (+16.5% YoY), with stocks/funds accounting for 15.5% (+2.2pct YoY). 2. In construction, insurers held RMB 85.2 billion (1.31% of total holdings), favoring high-ROE, high-dividend, low-valuation stocks like Power Construction Corp of China, China State Construction Engineering, and Sichuan Road & Bridge (75% of sector holdings). Sichuan Road & Bridge’s recent stake increase by China Post Life underscores this trend. 3. Projections suggest insurance allocations to construction could rise to RMB 79.4 billion by 2026 (+RMB 28.6 billion YoY), representing 3.53% of free-float market cap. 4. High-dividend picks include Sichuan Road & Bridge (6.3%), Jianghe Group (6.5%), and China State Construction International (7.2%). 5. The AI-driven computing boom is fueling semiconductor cleanroom demand, with global investments estimated at RMB 168 billion (15% of industry CAPEX). Top cleanroom plays: AsiaICEP, Sheng Hui Integration, and BoCheng Technology.