Since September, a series of macro-level policies aimed at stabilizing the economy and promoting growth have been rolled out from the top down, which is of great significance for driving the macroeconomy to stabilize and rebound, and has also received positive feedback from the capital market and the real economy. Insurance funds, with their inherent attribute of being patient capital, are also one of the important value investors supporting the healthy and sustainable development of the capital market.
Recently, Li Yunze, the director of the State Financial Regulatory Administration (hereinafter referred to as "Financial Regulatory Administration"), publicly mentioned that China Life (601628.SH) and New China Life Insurance (601336.SH) have been promoted to jointly initiate the establishment of a private securities investment fund for the capital market.
The reporter recently learned from an interview with China Life Group that the fund jointly established by China Life and New China Life Insurance is called Honghu Zhiyuan (Shanghai) Private Securities Investment Fund Co., Ltd. (hereinafter referred to as "Honghu Fund"). As of September 30, 2024, Honghu Fund has received a paid-in capital of 32.01 billion yuan, mainly invested in key industries related to the national economy and people's livelihood, and has achieved positive results.
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The person in charge of the asset company under China Life Group said to the reporter that as a pilot reform, Honghu Fund, in accordance with the principles of marketization, legalization, and "long money long investment," is actively exploring the investment laws of "patient capital" and is striving to form an operable and replicable investment style and strategy.
According to the reporter's understanding, some large insurance institutions are quite positive about the method of insurance private securities funds investing in the capital market and have indicated that they are studying it.
Seize the opportunity to build positions and buy
Insurance funds have large scale, long term, and stable sources, and naturally have the attribute of patient capital, and are also one of the important value investors supporting the healthy and sustainable development of the capital market. The reporter learned that in order to further promote the resolution of the "long money short match" problem of insurance companies and maintain the long-term stable development of the capital market, under the guidance of the Financial Regulatory Administration, Honghu Fund officially started investment on March 4, 2024.
According to the announcement content of New China Life Insurance in February this year, the investment range of Honghu Fund mainly includes listed company stocks, and the investment methods include but are not limited to continuous bidding, subscription of non-public issuance of stocks (A shares) / placement (Hong Kong stocks), rights issue (A shares) / rights issue (Hong Kong stocks), block trading or agreement transfer with one or a combination of trading counterparts, preferred allocation of convertible bonds, securities lending through securities lending, etc., and cash management investment varieties such as money market funds, bank deposits, and reverse repurchase of national bonds.
The person in charge of the asset company under China Life Group said to the reporter: In the past half year, Honghu Fund has adhered to the investment philosophy of long-term investment, value investment, and prudent investment, choosing listed companies with obvious competitive advantages, good governance structure, and good business profit model, buying and holding for a long time; when the stock market is sluggish, market confidence is insufficient, and the stock prices of listed companies are wrongly killed and fall sharply, they choose to buy firmly.
At the same time, Honghu Fund has extended the assessment period, for example, from 1 year to 3 years. The assessment indicators should also be adjusted accordingly, focusing on the total investment return rate, while taking into account the comprehensive return rate.The person in charge mentioned above believes that the long-term investment of the pilot fund has three aspects of significance in boosting the capital market: First, the structure of listed companies will continue to be optimized. As more and more investors turn their investment targets to companies with obvious competitive advantages, excellent governance structures, and good business profit models, these companies will also be continuously sought after by the market. In contrast, companies with poor quality will receive less and less market attention and will gradually and continuously exit the market. Second, when the performance assessment of investment institutions is extended and the holding period of stocks becomes longer, the fluctuation of stocks will also decrease, thereby reducing the overall volatility of the stock market. The growth of listed company performance will become the main driving force of the stock market, and the predictability of the stock market will increase, forming a healthy and stable development trend. Third, the Honghu Fund has achieved a dual combination of long-term investment of insurance funds and active capital market, providing pioneering experience for insurance institutions to set up private securities investment funds and support the continuous and stable development of the capital market.
The market is looking forward to more similar funds.
According to the latest data from the Financial Regulatory Authority, as of the end of August this year, the balance of insurance funds used was 31.8 trillion yuan, a year-on-year increase of 10.4%. By the end of August, insurance funds allocated more than 21 trillion yuan to various fixed-income assets such as bonds and bank deposits, and invested more than 6 trillion yuan in equity assets such as stocks, securities investment funds, and unlisted corporate equity.
In recent years, the Financial Regulatory Authority has successively issued a series of regulatory policies, allowing insurance funds to invest in public infrastructure securities investment funds, canceling the industry scope of financial equity investment, canceling the restriction on the fundraising scale of a single venture capital fund investment, and supporting insurance companies to play the role of value investors and institutional investors to help increase the proportion of direct financing. So far, insurance funds have invested more than 3.3 trillion yuan in stocks and stock funds.
It is worth mentioning that for the new attempt of the Honghu Fund, the market generally has high expectations.
The research report of the non-bank team of Huaxi Securities analyzed that it is expected that more similar funds will be established in the future, playing the positive role of long-term institutional investors in insurance, increasing the participation of insurance funds in the capital market, and achieving a virtuous interaction and joint development between insurance funds and the capital market.
Cao Deyun, the executive vice president and secretary-general of the China Insurance Asset Management Industry Association, said that the fund is an innovative model exploration of long-term investment with long-term funds, but it needs to explore and run in the next practice, summarize experience, improve and perfect, to achieve the expected goals.
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