Increasing the upper limit of insurance equity investment is a test for the A-share market

　　Financial Watch

　　How the A-share market shows its own competitiveness and increases its attractiveness to insurance funds is a practical problem that must be solved.

　　Recently, the China Banking and Insurance Regulatory Commission issued the "Notice on Matters Related to Optimizing the Supervision of the Equity Asset Allocation of Insurance Companies" (hereinafter referred to as the "Notice"), with a view to further deepening the market-oriented reform of insurance funds, guiding insurance funds to better serve the real economy, and actively playing The role of insurance institutions as important institutional investors in the capital market enhances the independent decision-making space for the use of funds by insurance companies.

　　The biggest highlight of the "Notice" is to raise the upper limit of insurance funds allocation equity assets, that is, from the current upper limit of 30% to 45%. This also means that hundreds of billions of yuan in insurance funds are expected to become incremental funds for A shares. Therefore, the announcement of the "Notice" has been described by many insiders as a major positive for the A-share market, which will stimulate the A-share market to return to the bull market.

　　The announcement of the "Notice" is good for the A-share market, which is obvious. But how big is this good? It is worth further investigation. Whether the benefits are big or small depends on how attractive the A-share market itself is to insurance funds. Therefore, raising the upper limit of the allocation of equity assets by insurance funds is a test for the A-share market.

　　Judging from the content of the "Notice", this adjustment to the upper limit of insurance equity investment is not a "one size fits all" but a differentiated adjustment. Although the upper limit of insurance equity investment has been adjusted to a maximum of 45%, there are few insurance companies that can enjoy this "treatment". Only insurance companies with a comprehensive solvency adequacy ratio of more than 350% at the end of the last quarter can enjoy This treatment. If the company's comprehensive solvency adequacy ratio is less than 200% at the end of last quarter, the upper limit of its equity asset investment will even be reduced to 25%, 20%, and 10% depending on the specific situation. Large and medium-sized companies such as China Life Insurance, China Life Insurance, Taikang Life Insurance, Xinhua Life Insurance, PICC Property Insurance, and Taiping Property Insurance have only increased the proportion of their equity assets from the original 30% to 35%. Therefore, the upper limit of 45% is untouchable by most insurance companies, and it is thankful that the upper limit of equity investment in some insurance companies is not lowered.

　　Moreover, even though the "Notice" grants a 30% or even 45% equity investment ceiling ratio, it is a realistic question how much insurance capital is invested in the stock market in the actual investment process. Judging from the current situation, the proportion of insurance funds invested in the stock market is actually still low, basically around 10%. Taking the data for the first quarter published by the China Banking Regulatory Commission as an example, as of the end of the first quarter of 2020, the balance of equity assets of insurance companies was 4.38 trillion yuan, accounting for 22.57% of the balance of insurance funds used. Among them, long-term equity investment was 1.95 trillion yuan, accounting for 10.05%; stocks were 1.54 trillion yuan, accounting for 7.95%; stock and hybrid funds were 0.54 trillion yuan, accounting for 2.76%. The latter two together account for 10.71%, which is the current proportion of insurance investment in the stock market.

　　And even if it is an investment in the stock market, it does not necessarily flow to the A-share market. Hong Kong stocks are actually an important flow of insurance capital. Taking insurance funds as an example, as of July 13 this year, insurance funds have raised a total of 16 times in the stock market this year, including 12 H-shares and 5 A-shares (one of which Also involves A+H). Therefore, a considerable portion of the funds invested by insurance funds in the stock market went to Hong Kong stocks.

　　Therefore, although the "Notice" once again adjusted the upper limit of insurance equity investment, up to 45% of the total assets of insurance funds, this move is an opportunity for A shares, but it is also a test, that is How attractive is the A-share market can attract insurance funds to invest in the A-share market, this is obviously a real problem that the A-share market needs to face directly. After all, the "hydrangea" of insurance funds has been thrown out, and it is up to the A-shares to grab the "hydrangea".

　　The competitors in the A-share market are strong. In addition to the obvious low price advantage of Hong Kong stocks compared to A shares, the equity of unlisted companies is also very attractive for insurance funds. On the one hand, the equity of these non-listed companies, once the related companies are listed, will greatly appreciate, its wealth effect is currently unmatched by the shares of listed companies. On the other hand, equity investment in non-listed companies belongs to the category of supporting the development of the real economy, which is strongly supported by current policies. On July 11 this year, a spokesman for the China Banking Regulatory Commission responded to a hot topic of concern from all walks of life, saying that it is necessary to urge the guidance of funds to "extract from reality", strictly prohibit funds from flowing into the real estate stock market in violation of regulations, and severely crack down on capital emptying and violations according to law Arbitrage behavior.

　　Therefore, in such a market environment, how to display the A-share market's own competitiveness and increase its attractiveness to insurance funds is a practical problem that must be solved. Only in this way, the A-share market can take a slice of the New Deal with the adjustment of the investment ceiling of insurance funds and equity.

　　□Pi Haizhou (financial commentator)