In the past 2021, insurance stocks seem to be a sector “forgotten” by institutions. According to statistics, no company in the insurance sector has received institutional research in 2021, Ping An Insurance (Group) Company Of China Ltd(601318) the last institutional visit was in September 2020. Correspondingly, the Shenwan insurance index fell 39% in 2021, significantly underperforming the market.
However, foreign capital, known as “smart money”, bucked the trend and bought insurance stocks on a large scale in 2021, China Life Insurance Company Limited(601628) , China Pacific Insurance (Group) Co.Ltd(601601) , The People’S Insurance Company (Group) Of China Limited(601319) and other stocks were greatly increased by northbound funds. Some foreign-funded institutions also regard insurance stocks as one of the topics worthy of attention in the Chinese market in 2022.
After a year of sharp decline, can the insurance sector turn over this year?
the insurance unit was left out in the cold
The frequency of institutional research often represents the degree to which a company is concerned by institutional investors. According to the data of East Money Information Co.Ltd(300059) choice, 2031 A-share listed companies received institutional research in 2021, with a total of 246000 times. Among them, Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Shenzhen Inovance Technology Co.Ltd(300124) , Shenzhen Transsion Holdings Co.Ltd(688036) , Thunder Software Technology Co.Ltd(300496) and other popular companies have accepted institutional research for more than 2000 times.
At the same time, no company in the insurance sector has received institutional research. The data show that Ping An Insurance (Group) Company Of China Ltd(601318) was last surveyed by institutions on September 29, 2020, and New China Life Insurance Company Ltd(601336) was surveyed by institutions on April 7, 2020.
With the popularity of institutional research falling to the freezing point, the overall performance of the insurance sector was sluggish in 2021. Shenwan insurance index fell by 39% in 2021, the largest annual decline in recent ten years, and the decline is second only to education stocks, ranking second in Shenwan’s secondary industry decline list.
Galaxy Securities said in the research report that in 2021, the fundamentals of the insurance sector were under pressure, the core business indicators such as premiums, new policies, new business value and return on investment fell, and the valuation of the sector was at a historical low.
According to statistics, the position of public funds in insurance stocks is also low. According to Zheshang Securities Co.Ltd(601878) statistics, by the end of the third quarter of 2021, the proportion of heavy holdings of public funds in insurance stocks in the value of insurance stock market had decreased from 2.28% at the end of 2020 to 0.88%, which was at a historical low.
foreign investment counter trend
However, during the “retreat” of public offering, foreign investors not only did not reduce their holdings of insurance stocks across the board, but increased their positions against the market.
According to the data of East Money Information Co.Ltd(300059) choice, by the end of 2021, the number of shares held by northbound funds in The People’S Insurance Company (Group) Of China Limited(601319) had increased by 91.31% compared with the beginning of 2021. In addition, the number of shares held by northbound funds in China Pacific Insurance (Group) Co.Ltd(601601) and China Life Insurance Company Limited(601628) also increased by 38.53% and 17.94% respectively.
Why are foreign investors so optimistic about insurance stocks?
Zhu Liang, China investment director of LianBo, said that the profit forecasts of Listed Companies in the A-share market in 2021 were lowered, but the decline in the profit of growth stocks was much higher than that of value stocks, which meant that the prosperity of growth stocks began to weaken. For investors, once the prosperity of growth companies is adjusted downward, the valuation will naturally decline. Therefore, he believes that the performance of value stocks is expected to be stronger than growth stocks in the future.
Yao Hongyao, director of Aberdeen and head of China equity investment department, said that the wealth sector is one of the five themes worthy of attention in the Chinese market in 2022. “The financial service industry plays a key role in creating and protecting wealth, and companies participating in the construction of a strong financial and capital market will benefit from it. Compared with other countries and regions in the world, China’s Insurance Service penetration is still low. Coupled with the aging population structure, we believe that the potential market for life insurance and health insurance is quite large.”
(Shanghai Securities News)
