Some experts said that this has something to do with the state’s continuous strengthening of the regulation of the real estate industry. In recent years, “real estate living without speculation” has always been the main tone of real estate regulation, and the setting of “three red lines” has strangled the capital lifeline of real estate enterprises. “It is expected that the follow-up insurance capital will further reduce investment in the traditional real estate industry.” Yang Fan said.
After several years of “honeymoon period”, with the deepening of real estate regulation, insurance enterprises and real estate are frequently performing the drama of “breaking up”.
Shell financial reporter observed that in the past six months, Taikang Life Insurance, everyone life insurance and other insurance companies have intensively reduced their holdings of real estate stocks, and Taikang Life Insurance even has to clear its positions at the expense of “cutting meat”. According to the latest data from wind, by the end of the third quarter of 2021, insurance companies had heavily held 6.6 billion real estate shares, a direct decrease of more than 400 million shares compared with the end of 2020.
Yang Fan, an expert in the insurance industry, told the reporter of shell finance and economics that in recent years, due to the state’s increased regulation of the real estate industry, China’s new population has decreased sharply (for example, China only added 480000 people in 2021), the flow of new money to the real estate field has been strictly controlled, and there is not much hot money in the market. The golden age of real estate development has passed, and it is impossible to maintain and increase the value of assets. Therefore, It is also difficult for insurance capital to invest in real estate. It is expected that the follow-up insurance capital will further reduce investment in the real estate industry.
Taikang cut meat and reduced its holdings Yango Group Co.Ltd(000671) after only entering the board for more than one year
Recently, Taikang’s clearance transfer and reduction of Yango Group Co.Ltd(000671) have aroused public concern again. According to the announcement in early February, Taikang Life Insurance plans to reduce its holdings of Yango Group Co.Ltd(000671) shares through centralized bidding and block trading according to the company’s asset allocation needs and relevant investment decisions. It plans to reduce its holdings by no more than 3.99% of the company’s total share capital, which is almost all the shares of Yango Group Co.Ltd(000671) held by Taikang Life Insurance.
Earlier, in December 2021, Taikang pension has reduced Yango Group Co.Ltd(000671) 2% of its shares through block transactions. At the same time, Taikang Life Insurance, Taikang pension and Taihe building materials signed the share transfer agreement, transferring 7.41% of the shares, with a unit price of only 3.05 yuan / share (including tax).
It is only more than one year since Taikang transferred Yango Group Co.Ltd(000671) shares in October 2020. At that time, Taikang transferred 13.46% of Yango Group Co.Ltd(000671) shares with a unit price of 6.09 yuan / share (including tax) for 3.378 billion yuan. At that time, its entry was mainly based on optimistic about the long-term development potential of Yango Group Co.Ltd(000671) in the future, so as to obtain stable dividends of listed companies and share long-term value investment income.
Indeed, the operating income of Yango Group Co.Ltd(000671) and the net profit attributable to the shareholders of the listed company in that year were good, with a year-on-year increase of 34.60% and 29.85%. However, with the increasing upgrading of the state’s regulation of real estate, the performance of the real estate enterprise has changed. In 2021, it is expected to lose 4.5 billion yuan to 5.8 billion yuan, and the share price has also fallen steadily. As of the closing on February 17, Yango Group Co.Ltd(000671) share price was only 2.63 yuan / share, It was less than half of the share price transferred by Taikang at that time. If dividends and performance commitment compensation were not considered, Taikang’s investment loss exceeded 1 billion yuan, which was properly “stepping on thunder”.
Insiders told shell finance reporters that Taikang’s investment ability is still very good. It is reasonable to say that such a problem should not occur. So why did Taikang choose to reduce its holdings of Yango Group Co.Ltd(000671) ? How to arrange real estate investment in the future? As of press time, the company has not given a reply.
from “honeymoon” to “breakup”, insurance companies have intensively reduced their holdings of real estate stocks in the past six months
In fact, Taikang’s reduction of Yango Group Co.Ltd(000671) is only an epitome of the gradual withdrawal of insurance companies from real estate stocks. In the past six months, many insurance companies have sold off real estate stocks.
For example, everyone life has significantly reduced its holdings of Gemdale Corporation(600383) . According to statistics, since September 2021, everyone life has reduced its holdings of Gemdale Corporation(600383) for six rounds, accounting for 15% of the company’s total share capital, with a total cash out of about 7 billion yuan. Previously, everyone life was the second largest shareholder of Gemdale Corporation(600383) , with a shareholding ratio of 20.43%. Moreover, everyone life also reduced its holdings of Financial Street Holdings Co.Ltd(000402) twice at the end of last year, The shareholding ratio decreased from 14.1% to 10.11%.
In addition, last year China Life Insurance Company Limited(601628) also reduced its holdings of China Vanke Co.Ltd(000002) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) ; Harmonious health also reduced its holdings of Financial Street Holdings Co.Ltd(000402) ; Junkang life also reduced its holdings of Beijing Capital Development Co.Ltd(600376) and so on.
According to the latest data of wind, by the end of the third quarter of 2021, the insurance capital was still heavily invested in 15 real estate stocks, including China Vanke Co.Ltd(000002) , China Union Holdings Ltd(000036) , Financial Street Holdings Co.Ltd(000402) , Jinke Property Group Co.Ltd(000656) , Tieling Newcity Investment Holding (Group) Limited(000809) , Poly Developments And Holdings Group Co.Ltd(600048) , China Fortune Land Development Co.Ltd(600340) , holding a total of 6.6 billion shares, a direct decrease of more than 400 million shares compared with the end of 2020.
This is in sharp contrast to the “rush in” of insurance funds during the boom period of real estate. In 2014, the regulatory authorities began to implement the Interim Measures for the administration of the use of insurance funds, increasing the proportion of insurance funds investing in real estate to 30%. The investment of insurance enterprises in the real estate field has been deregulated. They have invested heavily in relevant fields for many times and listed real estate companies, The most typical is the “battle between Bao and WAN” in 2015. In mid-2016, Kerui statistics found that at least 54 A-share listed real estate enterprises were held by heavy positions of insurance capital, nearly four times that of today.
Many analysts believe that China’s house prices have risen sharply in the past few years, and leading real estate companies with stable cash flow, low valuation and stable income have naturally become high-quality targets for venture capital investment.
Hao Lianfeng, director of China Insurance Research Institute, told shell finance reporters that the long-term return on investment in real estate is relatively high. Taking the United States as an example in the past 200 years, the return on investment in real estate (including rising house prices and rental income) is higher than the nominal GDP growth rate. In addition to self occupied housing, it is difficult for insurance companies to invest in real estate on a large scale, which makes some insurance enterprises turn to allocate stocks and equity in the real estate industry with low valuation.
the regulation of “real estate, housing and non speculation” is severe, and venture capital may further reduce its holdings of real estate stocks
Why is there such a big attitude change between insurance capital and real estate enterprises from “honeymoon” to breaking up? Hao Lianfeng told shell finance reporters that in recent months, a number of listed real estate companies have announced that insurance companies have reduced their holdings of stocks, but if there is a buy, there must be a sell, and the sale and purchase must be equal. If insurance companies reduce their holdings of real estate stocks, investors (including insurance companies) must increase their holdings of real estate stocks. In the past few years, some insurance companies have allocated a high proportion in the real estate industry, and some changes have taken place in the fundamentals of the real estate industry. It is normal to adjust the industry allocation accordingly.
However, some experts said that this has something to do with the state’s continuous strengthening of the regulation of the real estate industry. In recent years, “real estate living without speculation” has always been the main tone of real estate regulation, and the setting of “three red lines” has strangled the capital lifeline of real estate enterprises. “It is expected that the follow-up insurance capital will further reduce investment in the traditional real estate industry.” Yang Fan said.
“At present, with China’s per capita housing area of more than 40 square meters and the weakening of the driving force of house price rise, the policy repeatedly emphasizes that housing is not fried. Some insurance enterprises will reduce the asset allocation of the real estate industry and turn to looking for new industries with both safety, liquidity and profitability, or innovative products (such as exchangeable bonds) with both safety, liquidity and profitability.
”Hao Lianfeng said, “in the follow-up, different insurance companies may have different investment strategies in the real estate industry. In the past, too many insurance companies in the over allocation real estate industry may no longer increase or even reduce their holdings of real estate, while in the past, insurance companies in the low allocation real estate industry may gradually absorb low prices when the real estate index has fallen for several consecutive years.”
pension real estate or Chengxin direction, a number of insurance enterprises have been in the layout
In fact, in recent years, real estate is the key industry for insurance enterprises to invest, second only to the financial industry. In the future, if insurance enterprises reduce their investment in real estate, where will the remaining funds be invested?
Yang Fan told the reporter of shell finance and economics that it is expected that the follow-up insurance companies will turn to emerging fields such as pension real estate. On the one hand, China’s aging degree is deepening, the elderly population is soaring, and there is a large demand for pension services; On the other hand, there is a natural connection between pension and insurance business, so insurance enterprises can better cut in, and insurance enterprises and pension real estate need long-term investment and long-term stable income.
At present, Taikang, Ping An, everyone insurance, CPIC life insurance and other insurance companies have laid out pension real estate. For example, Taikang has laid out a total of 27 Taikang home pension communities in 24 cities across the country; In May 2021, Ping An also announced to enter the high-end comprehensive health care community; In 2022, everyone insurance also promoted its “urban medical care” community to Nanchang and Tianjin, which is the fourth and fifth “urban medical care” community of everyone insurance after Chaoyang, Youyi and Fuwai communities in Beijing.
