After the top financial regulatory authority made a significant statement, the A-share market welcomed a strong rise.
By the close, the Shanghai Composite Index rose by 4.15%, marking the largest single-day increase since August 2020.
The Shenzhen Component Index increased by 4.36%, the ChiNext Index rose by 5.54%, and the North Index 50 rose by 3.23%.
Among them, the insurance index rose by 5.58%, ranking fourth in the Wind second-level industry increase.
Specifically, Tianmao Group (000627.SZ) closed at the daily limit, Xinhua Insurance (601336.SH) surged by 8.54%, China Pacific Insurance (601601.SH) rose by 6.71%, Ping An Insurance (601318.SH) increased by 5.47%, China Life Insurance (601628.SH) rose by 3.57%, and People's Insurance Company (601319.SH) increased by 3.43%.
On September 24, at a press conference held by the State Council Information Office, the financial regulatory authority not only announced policies such as reserve requirement ratio reduction, policy interest rate reduction, and existing housing loan interest rate reduction, but also mentioned promoting long-term funds into the market, trying new monetary policy support for the development of the capital market, and other content related to insurance funds.
Shortly after the press conference, many insurance salespeople promoted on social media that the downward trend of interest rates will be beneficial to the sales of insurance products.
Currently, the insurance industry is still in the period of adjusting the predetermined interest rate, but compared with deposits, wealth insurance products still have a competitive advantage in interest rates.
A securities analyst who focuses on the insurance industry told the Economic Observer Network that insurance sales are expected to remain strong, and if market interest rates do not decline sharply, the repair of insurance valuations can be expected.
At the press conference, the chairman of the China Securities Regulatory Commission (CSRC), Wu Qing, said that the regulatory environment for "long money for long-term investment" should be improved, the regulatory tolerance for long-term funds' equity investment should be increased, the assessment for a cycle of more than 3 years should be fully implemented, the institutional barriers affecting long-term investment of insurance funds should be eliminated, and insurance institutions should be encouraged to be steadfast value investors, providing stable long-term investment for the capital market.
As an important part of long-term funds, insurance funds play a "ballast stone" role in the market.
The China Insurance Asset Management Association disclosed data related to insurance funds in 2023, showing that as of the end of 2023, the balance of insurance funds used was 28.16 trillion yuan, a year-on-year increase of 11.1%.
In terms of allocation, the investment of insurance funds in bonds was 11.97 trillion yuan, stocks, public funds (excluding money funds), and portfolio products were 4.79 trillion yuan, bank deposits and cash and liquidity assets were 2.90 trillion yuan, debt investment plans and trust plans were 2.65 trillion yuan, equity investment assets were 1.75 trillion yuan, investment real estate was 0.58 trillion yuan, and overseas assets were 0.48 trillion yuan.
In terms of growth rate, the top three assets in the scale of insurance fund investment are interest rate bonds (28.45%), public funds (stocks and mixed types) (21.62%), and investment real estate (20.50%).
It is worth noting that due to the bull market in the bond market, the investment side of the insurance industry improved in the first half of the year, driving the recovery of profits.
The aforementioned analyst said that at the press conference, the regulatory authority also responded to the issue of the downward trend of government bond interest rates under the background of interest rate cuts, and clarified its attitude of caring for the market.
The governor of the People's Bank of China, Pan Gongsheng, said that the downward trend of government bond yields in the early stage was due to the People's Bank of China guiding the market interest rates downward through policy interest rates, the slow supply of government bond issuance in the early stage, and some factors such as the weak risk awareness of small and medium-sized market financial institutions, pushing the wave and the herd effect.
Pan Gongsheng said that at present, China's long-term government bond yield is hovering around 2.1%, and the level of government bond yield is the result of market formation.
The People's Bank of China respects the role of the market.
This has created a good monetary environment for the implementation of an active fiscal policy.
However, it is also necessary to see that interest rate risk is an important part of financial institutions' risk management.
The risk event of the bankruptcy of the US Silicon Valley Bank enlightens us that the central bank needs to observe and assess market risks from a macro-prudential management perspective and take appropriate measures to weaken and hinder the accumulation of risks, which is the responsibility of the central bank.
At the press conference, Pan Gongsheng also mentioned using new monetary policy tools to support the stable development of the stock market.
Pan Gongsheng mentioned that for the first time, the People's Bank of China innovated structural monetary policy tools to support the capital market, one of which is the swap facility for securities, funds, and insurance companies.
Specifically, it supports qualified securities, funds, and insurance companies to use their own bonds, stock ETFs, and constituents of the Shanghai-Hong Kong 300 as collateral, and exchange them from the central bank for high-liquidity assets such as government bonds and central bank bills.
This policy will greatly enhance the ability of relevant institutions to obtain funds and increase their stock holdings.
The funds obtained by institutions through this tool can only be used to invest in the stock market.
The first phase of the swap facility operation is 500 billion yuan, and the scale can be expanded in the future according to the situation.
An insurance investment person told the Economic Observer Network that insurance companies can slightly increase leverage through repurchase operations, with trading counterparts in the interbank bond market, and the use of funds is not limited.
As for the "swap facility" with the central bank as the trading counterpart, the specific effect of increasing leverage for stock investment funds needs further observation.
For insurance funds, another policy benefit is that the regulatory authority encourages insurance institutions to establish private securities investment funds.
At the press conference, the director of the China Banking and Insurance Regulatory Commission, Li Yunze, said that on the basis of Xinhua Life and China Life establishing private securities investment funds, the reform pilot of long-term investment of insurance funds will be expanded, and insurance institutions that meet the conditions are supported to establish private securities investment funds.
At the same time, insurance companies are urged and guided to optimize the assessment mechanism, and insurance funds are encouraged and guided to carry out long-term equity investment.
At the end of November 2023, China Life and Xinhua Insurance issued an announcement stating that both parties invested 25 billion yuan respectively to jointly initiate the establishment of a private securities investment fund.
In March 2024, Honghu Zhiyuan (Shanghai) Private Investment Fund Co., Ltd. was established in Shanghai, and this fund is the private fund jointly established by China Life and Xinhua Insurance.
In June 2024, Xinhua Insurance Chairman Yang Yucheng revealed that some of the funds have been allocated.
An insurance industry person said that in addition to China Life and Xinhua Insurance, other large insurance companies may also establish similar private investment funds in the future.
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