On February 11, the insurance sector (Shenwan secondary industry classification) rose again against the trend, rising 2.98% on the same day, becoming the focus of the market. In fact, as of February 11 this year, the insurance sector has quietly increased by 9.02%, ranking sixth among the major sectors of a shares.
From the operation of various funds on A-share insurance stocks, the trend of foreign capital increasing positions is obvious.
According to the reporter of Securities Daily, as of the closing on February 11, the positions of foreign capital in The People’S Insurance Company (Group) Of China Limited(601319) , New China Life Insurance Company Ltd(601336) , China Pacific Insurance (Group) Co.Ltd(601601) , Ping An Insurance (Group) Company Of China Ltd(601318) , China Life Insurance Company Limited(601628) increased by 51.2%, 25.3%, 15.4%, 13.6% and 8.7% respectively compared with December 31 last year.
From the perspective of the net purchase amount of foreign capital, Ping An Insurance (Group) Company Of China Ltd(601318) known as “insurance Mao” by the market has been listed in the top 10 active trading shares of Shanghai Hong Kong stock connect on that day for 24 trading days in the year, so its net purchase amount of foreign capital is also easy to calculate. The total net purchase amount in the year reached 4.9 billion yuan, and the net purchase amount ranks first in A-share insurance stocks.
substantial increase of foreign investment
insurance stocks rose 9% during the year
In 2021, insurance stocks experienced the “darkest” year in the past 10 years. The annual share price fell by 39%, second only to the education industry. However, since the beginning of 2022, there have been signs of a turnaround for insurance stocks. During the year, the share price swept away the sluggish trend of last year and rose sharply by 9.02%, ranking sixth in a shares.
From the specific growth of different insurance stocks during the year, Ping An Insurance (Group) Company Of China Ltd(601318) , China Pacific Insurance (Group) Co.Ltd(601601) , China Life Insurance Company Limited(601628) , New China Life Insurance Company Ltd(601336) , The People’S Insurance Company (Group) Of China Limited(601319) rose by 10.3%, 6.3%, 5.0%, 5.0% and 3.6% respectively. It is not difficult to see that Ping An Insurance (Group) Company Of China Ltd(601318) saw the largest increase in the year, driving the rise of the insurance sector.
With the stock price picking up, Ping An Insurance (Group) Company Of China Ltd(601318) has a total market value of one trillion yuan. It is also the only insurance stock with a total market value of more than one trillion yuan. As of February 11, the total market value of Ping An Insurance (Group) Company Of China Ltd(601318) , China Life Insurance Company Limited(601628) , China Pacific Insurance (Group) Co.Ltd(601601) , The People’S Insurance Company (Group) Of China Limited(601319) , New China Life Insurance Company Ltd(601336) was 1016.2 billion yuan, 893.2 billion yuan, 277.4 billion yuan, 215.4 billion yuan and 127.3 billion yuan respectively.
The recovery of insurance stocks is inseparable from the increase of various funds. Take foreign capital as an example. Since this year, foreign capital has increased positions in all five major A-share insurance stocks. From the perspective of net purchase, the net purchase of Ping An Insurance (Group) Company Of China Ltd(601318) by foreign capital reached 4.9 billion yuan in the 24 trading days of the year.
Since the other four A-share insurance stocks were not listed in the top ten active stocks on that day, their net purchases by foreign capital can only be estimated. According to the conservative estimation of the lowest share price of the range multiplied by the total number of shares held by the range, the net purchases of domestic and foreign capital for {601601601}, New China Life Insurance Company Ltd(601336) , The People’S Insurance Company (Group) Of China Limited(601319) , China Life Insurance Company Limited(601628) exceeded 800 million yuan, 340 million yuan, 230 million yuan and 140 million yuan respectively.
In addition to foreign capital, individual insurance stocks also boost their share prices through repurchase. On February 8, Ping An Insurance (Group) Company Of China Ltd(601318) announced that as of January 31, the company had repurchased 77.7651 million A-Shares through centralized bidding, accounting for 0.42% of the total share capital of the company, and the total amount of funds paid was RMB 3.899 billion (excluding transaction costs).
At present, the increase of insurance stocks by funds, securities companies and other institutions during the year is unknown. However, the position data of the fourth quarter of last year disclosed by the funds at the end of January showed that as early as the fourth quarter of last year, the funds had reduced the reduction rate of insurance stocks.
The non bank team of Ping An Securities said that in the fourth quarter of 2021, the proportion of all fund holdings in the insurance sector was 0.40%, and the reduction efforts slowed down marginally. The top five insurance stocks held by the whole fund are Ping An Insurance (Group) Company Of China Ltd(601318) , China Pacific Insurance (Group) Co.Ltd(601601) , China Life Insurance Company Limited(601628) , New China Life Insurance Company Ltd(601336) , The People’S Insurance Company (Group) Of China Limited(601319) from high to low.
Although the fund slowed down the reduction of its holdings in the insurance sector, as of the end of last year, the fund still showed an ultra-low allocation to insurance stocks. According to the Research Report of Ping An Securities, from the perspective of fund allocation proportion, in the fourth quarter of 2021, the low allocation degree of the fund to the insurance sector was basically the same month on month. If taking the circulation market value of Shanghai and Shenzhen 300 as the standard, the standard allocation proportion of the insurance sector is 3.88%, but at present, it is only 3.48 percentage points lower.
the advantage of undervaluation is highlighted
but not yet a sufficient condition for bottom reading
With the stock price picking up, investors’ differences on the future market of insurance stocks began to increase.
In Ping An Insurance (Group) Company Of China Ltd(601318) and other insurance stocks, some investors believe that at present, insurance stocks are “rising” and “the inflection point has come”. However, some investors believe that the fundamentals of insurance stocks have not improved, the rebound at the beginning of the year can not last, and the future market should “rush up and sell”.
What is the current allocation value of insurance stocks? From the perspective of institutions and insiders, the positive and negative factors of insurance stocks are intertwined. Although the industry has the advantage of undervaluing, the reversal of fundamentals will take time.
In terms of specific benefits, there are three benefits in the insurance sector at present: first, the valuation of insurance stocks is at a historical low, Ping An Insurance (Group) Company Of China Ltd(601318) , China Life Insurance Company Limited(601628) , China Pacific Insurance (Group) Co.Ltd(601601) , The People’S Insurance Company (Group) Of China Limited(601319) , New China Life Insurance Company Ltd(601336) and the current price earnings ratio (TTM) are 8.4, 17.3, 10, 9.7 and 8.4 respectively. Second, the policy marginal impact of the real estate industry, which has a negative impact on insurance stocks, has eased. Third, the pressure on the asset side of the insurance industry has eased, which is reflected in the fact that the interest rate has hit the bottom and rebounded.
Domestic research institutions believe that the rebound of insurance stocks during the year is to benefit from the undervalued value. According to the research report released by the head securities firm Citic Securities Company Limited(600030) on February 12, “the rebound of insurance stocks this year is mainly due to the market demand for the allocation of undervalued sectors. After the sharp decline of share prices in 2021, the debt pressure and asset risk of major insurance companies have been fully reflected, and the balance sheet behind net assets has real and clean value.”
Although insurance stocks are currently in the stage of “extremely undervalued” in history, many domestic institutions believe that the current undervalued value does not constitute a sufficient condition for bottom reading.
Citic Securities Company Limited(600030) believes that the sales model represented by agent channels of life insurance companies has been impacted and has not yet bottomed out; The exploration of the new model is still in the process and has not been established, and the right side (configuration strategy) has not yet arrived.
The main factors affecting the growth rate of insurance companies in the current quarter, such as the number of people in the industry, are the main factors affecting the growth rate of new insurance companies in the first quarter, including the number of people in the industry; Second, the insurance industry is bound to be affected by the downward pressure of the macroeconomic cycle; Third, it will take time for the transformation achievements of major insurance enterprises to appear; Fourth, the repeated epidemic has affected the development of the insurance industry.
Xu Yuchen, a founding member of the China Association of actuaries, told the Securities Daily that there were the following hidden worries about the growth rate of insurance premiums in the first quarter of this year: first, affected by the switching between old and new serious illness insurance in the first quarter of last year, the insurance industry pushed the serious illness insurance with high business value, pushing up the premium base, and the growth rate of insurance premiums in the first quarter of this year was under pressure.
Second, since last year, innovative products such as Huimin insurance have been launched in a large area. The premium of these products is low, but the insurance amount is high, forming a certain substitution effect for products such as serious illness insurance. Third, the downward pressure of macro-economy will affect the growth rate of premium from the aspects of residents’ disposable income.
In the view of insurance enterprises, the development model of life insurance industry, which has a great impact on the insurance industry, urgently needs iterative upgrading and in-depth reform.
Wang Guangjian, deputy secretary of the Party committee and executive deputy general manager of CPIC life insurance, believes that the development environment of life insurance industry has changed significantly in recent years. The human driven, product driven and competition driven models are facing the dilemma of sustainable development. The output efficiency of high staff increase, high-value products and high input is becoming more and more unsustainable, resulting in the current situation of low retention, low continuation rate and low input-output.
Many institutions such as Guotai Junan Securities Co.Ltd(601211) believe that the undervalued value of insurance stocks constitutes a certain safety margin, but the undervalued value has not yet formed a sufficient condition for bottom reading life insurance stocks.
Citic Securities Company Limited(600030) believes that there are three scenarios for the fundamentals of the insurance industry in the next three to five years. The first is an optimistic scenario: with the acceleration of population aging, pension related demand has brought a new growth curve. At present, the layout of life insurance stocks can realize valuation repair and share a new round of growth cycle. The second is the neutral scenario: at present, the valuation of allocated life insurance stocks is in a reasonable range, which may share the roe return of slightly more than 10% of the overall life insurance company. The third is the pessimistic scenario: the demand for life insurance continues to be depressed, and there are major problems in the interest rate environment and asset risk again. At present, life insurance stocks should not be arranged. Combined with China’s current economic environment, these three scenarios may occur. From the perspective of the industry as a whole, the undervalued value has not yet formed a sufficient condition for bottom reading life insurance stocks. Relevant report {4567889}
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