China’s State-Owned Insurers to Invest Billions in Equities by 2025
China’s insurance giants are expected to inject a significant amount of capital into the country’s equity markets in the coming years. This shift follows a government directive that mandates a portion of new premiums be allocated to stocks. According to an analysis by S&P Global Market Intelligence, the combined investment from state-owned life insurers could exceed $14 billion (CNY100 billion) by 2025 if the 30% allocation requirement is fully implemented. If 2024 data is used, the total fund allocation could reach nearly $57 billion.
The announcement by authorities requires major state-owned insurers to begin directing 30% of newly added insurance premiums towards yuan-denominated equities, beginning in 2025.
Based on 2023 new business premiums, China Life Insurance Co. Ltd. is projected to invest approximately $8.85 billion (CNY63.24 billion), China Pacific Insurance (Group) Co. Ltd. around $3.48 billion (CNY24.86 billion), The People’s Insurance Co. (Group) of China Ltd. about $2.03 billion (CNY14.50 billion), and New China Life Insurance Co. Ltd. roughly $1.72 billion (CNY12.27 billion). These companies currently boast robust solvency ratios, with figures of 218.5%, 257.0%, 250.7%, and 278.4%, respectively.
Sun Ting, chief analyst for the nonbank financial sector at Soochow Securities, adds further perspective. “If 2024 data becomes the basis, the estimated total fund allocation to yuan-denominated equities in 2025 from five state-owned life insurers—China Life, China Pacific Insurance, New China Life, People’s Insurance, and China Taiping Insurance Group Ltd.—could potentially reach $56.57 billion (CNY404.1 billion),” Sun stated.
The government’s directive appears to be favorably impacting market sentiment. The CSI 300 index, a prominent benchmark for the Chinese stock market, is approaching the 4,000 mark.
The timing of the announcement is notable, coming just a day after former U.S. President Donald Trump indicated he was considering imposing tariffs on Chinese goods, a move that initially caused a slight dip in the index.
Further gains in China’s equity markets are possible if private insurer Ping An Insurance (Group) Co. of China Ltd. increases its stock investments alongside its state-owned counterparts.
