As listed companies completed their semi-annual report disclosures, the heavy holdings of insurance-backed private equity funds have come to light. As of the end of June this year, insurance private equity funds held heavy positions in 7 A-share stocks (those ranking among the top ten circulating shareholders of listed companies), with state-owned enterprises receiving particular favor.

Meanwhile, examining the A-share stocks heavily weighted by insurance companies in the first half of the year, listed companies in banking, utilities, and transportation sectors were the main targets of insurance capital, reflecting insurers' preference for high-dividend, low-valuation stocks with dividend characteristics, emphasizing return certainty and risk controllability.

Preference for State-owned Enterprises

With the advancement of insurance capital's long-term investment reform pilot program, insurance-backed private equity fund products have gradually increased. Currently, six products are already in operation. Among these, as of the end of June this year, three private equity funds managed by Guofeng Xinghua (Beijing) Private Fund Management Co., Ltd. held heavy positions in 7 A-share stocks.

Specifically, according to Wind data, among the three funds, Honghu Zhiyuan (Shanghai) Private Investment Fund Co., Ltd. (hereinafter referred to as "Honghu Zhiyuan Phase I") held heavy positions in Yili Group, Shaanxi Coal Industry, and China Telecom, with no changes in holdings compared to the end of the first quarter; Guofeng Xinghua Honghu Zhiyuan Phase II Private Securities Investment Fund (hereinafter referred to as "Honghu Zhiyuan Phase II") held heavy positions in China Shenhua and PetroChina; Guofeng Xinghua Honghu Zhiyuan Phase III Private Securities Investment Fund No.1 held heavy positions in China Petroleum & Chemical Corporation and Daqin Railway.

Long Ge, Associate Director of the Innovation and Risk Management Research Center at the University of International Business and Economics, stated that insurance capital investment needs to consider long-term returns and risk balance, and the heavy holdings of insurance private equity funds all possess characteristics of high dividend yields and stable development. In terms of dividend yields, based on the latest closing prices of listed companies, among the stocks heavily held by insurance private equity funds, Shaanxi Coal Industry, China Shenhua, PetroChina, and China Petroleum & Chemical Corporation had dividend yields (over the past 12 months) of 6.6%, 5.9%, 5.28%, and 5.02% respectively, at relatively high levels, while other stocks also maintained high dividend yields (over the past 12 months). Additionally, China Telecom has committed to gradually increasing its cash dividend distribution to over 75% of shareholders' attributable profits for three years starting from 2024, providing stable cash flow to match insurance capital's long-term liability needs.

Chen Yijiang, President of New China Asset Management Co., Ltd., stated at a recent New China Insurance 2025 interim results announcement that as of the end of June this year, Honghu Zhiyuan Phase I has completed its position-building task and achieved good returns; Honghu Zhiyuan Phase II has basically completed position-building; Honghu Zhiyuan Phase III started in early July and is progressing very smoothly. New China Insurance plans to invest a cumulative total of 46.25 billion yuan in the aforementioned three-phase funds.

According to Chen Yjiang's introduction, in terms of investment direction and scope, Honghu Zhiyuan Phase III's investment range covers A+H shares of large listed companies that meet criteria among CSI A500 Index constituents. The selection criteria for target companies include good governance, stable operations, relatively stable dividends, and good liquidity. After more than a year of practice, the investment team has made significant progress in related investment strategy allocation concepts and stock selection capabilities. In the first half of the year, the funds' risk indicators were lower than benchmarks while return indicators exceeded benchmarks, achieving dual success in functionality and profitability.

Heavy Holdings in 735 Individual Stocks

Participating in long-term stock investment reform pilots through private equity funds is one way insurance companies invest in the secondary market. Additionally, insurance companies also directly invest in stocks. Through the list of top ten circulating shareholders in A-shares, we can observe the latest positioning of insurance companies in the secondary market.

Wind data shows that as of the end of June this year, insurance companies appeared on the top ten circulating shareholders lists of 735 listed companies, holding a total of 92.74 billion shares, an increase of 1.069 billion shares compared to the end of the first quarter. The market value of holdings was approximately 1.57 trillion yuan, an increase of about 121.46 billion yuan compared to the end of the first quarter. Looking closely at changes in insurance capital's heavy holdings, compared to the end of the first quarter, insurance companies increased holdings in 241 A-share stocks in the second quarter while newly becoming top ten circulating shareholders in 146 listed companies.

Excluding China Life Group's holdings in China Life and Ping An Group's holdings in Ping An Bank, as of the end of June, the top five listed companies by insurance company shareholding were China Minsheng Banking Corp., Shanghai Pudong Development Bank, China United Network Communications, Beijing-Shanghai High Speed Railway, and Zhejiang Commercial Bank.

Overall, listed companies with substantial insurance holdings are distributed across banking, electrical equipment, utilities, transportation, and software services sectors.

Leaders from multiple listed insurance companies stated they will place greater emphasis on equity asset allocation and the allocation value of high-dividend stocks. For example, Qin Hongbo, Vice President of New China Insurance, stated that as the interest rate center moves downward, the safety cushion for fixed-income assets is significantly thinning, while liability-side costs remain rigid. Facing such challenges, New China Insurance's overall approach is asset-liability linkage, placing greater emphasis on the allocation value of high-dividend stocks while actively positioning in directions aligned with national strategies for new quality productive forces, actively supporting the development of strategic emerging industries and future industries.

Liu Hui, Vice President and Board Secretary of China Life, stated at the company's 2025 interim results announcement that the company remains optimistic about the A-share market in the second half of the year and will continue to focus on sector rotation within rising market segments, such as investment opportunities in technological innovation, advanced manufacturing, and new consumption. Based on this market judgment, the second half will adopt an allocation approach of "stabilizing allocated assets and optimizing flexible assets."

"In terms of equity markets, we will actively implement requirements for medium and long-term capital market entry, continuously optimize equity allocation structure, focus on allocating new quality productive forces and high-quality high-dividend stocks, and continuously enhance the stability and long-term return potential of equity allocation," Liu Hui stated.