The “notice on further supporting the healthy development of listed companies” (i.e. “12 articles on supporting the development of listed companies”, hereinafter referred to as “12 articles”) jointly issued by the CSRC, the SASAC and the all China Federation of industry and Commerce has made it clear to improve the institutional mechanisms conducive to the participation of long-term institutional investors in the capital market, and encourage and support social security, pension, trust, insurance and financial institutions to allocate more funds to equity assets, Increase capital market investment, especially stock investment of high-quality listed companies. In the view of many insiders, long-term funds are the ballast of the capital market. Recent policies frequently guide long-term institutional investors to play a greater role in the capital market, which helps to promote the steady operation of the market. Considering from policy, fundamentals, valuation and other dimensions, the current allocation of high-quality equity assets has become the consensus of mainstream institutions.
long-term funds help stabilize the capital market and Zhiyuan
On the policy of encouraging long-term investment by institutional investors, Huang Hua, head of the multi asset strategy group of China Europe Fund, believes that this is good news for both the capital market and the asset management industry. For the capital market, encouraging long-term capital to enter the market is conducive to improving the value discovery function of the capital market and reducing the market disturbance caused by various short-term noises. At the same time, as the ballast of the market, long-term funds help to control market fluctuations and help the capital market stabilize and grow.
Yang Xiaosong, general manager of Nanfang fund, has a similar view. In his opinion, long-term institutional investors not only have relatively better investment return performance, but also have the characteristics of long investment cycle and stable investment style. The increase in the proportion of long-term institutional investors in A-Shares will help guide the transformation of market investment style to value investment, reduce market volatility and promote the building of a resilient, long-term and healthy capital market.
Various institutions are also constantly guiding long-term funds into the market. Yunnan trust revealed that in recent years, the overall transformation rhythm of the trust industry has been accelerating, especially increasing the comprehensive services of the capital market, giving full play to the trust advantages and strengthening asset allocation services. The company continues to guide investors to pay attention to the long-term investment value and development trend of equity assets. At the same time, it continues to increase its support and investment in investment research and increase the investment ratio of equity assets or related strategies.
Based on the current market, Han Xianwang, chief economist of huitianfu fund, said that due to the good performance of the equity market in recent years, some investors underestimated the risks implied in equity investment, and the awareness of matching risk and return has not been fully established. Therefore, in the process of decline, the redemption pressure of products will increase. In the future, investor education should be further strengthened and the investment concept of long-term investment and matching risk and return should be established to adapt to the era of great wealth and asset management.
adding high-quality equity assets into institutional consensus
As an important representative of institutional investors, in recent years, public and private placement, trust and other institutions have attracted a large influx of funds, and equity assets have become an important allocation direction of residents’ financial management. At the same time, increasing capital market investment, buying high-quality stocks and holding them for a long time have also become the consensus of mainstream institutions.
According to the data of China Trust Industry Association, by the end of 2021, the scale of fund trust in the trust industry was 15.01 trillion yuan, and the proportion of fund trust invested in the securities market reached 22.37%, an increase of 8.5 percentage points year-on-year. Similarly, the scale of private equity investment funds was only 3.77 trillion yuan at the beginning of 2021, and has increased to more than 6 trillion yuan in just over a year; In 2021, the scale of public equity fund products increased by more than 2 trillion yuan.
Huang Hua said that for the asset management industry, although the volatility of stocks is higher than that of bonds, in the long run, stock investment has higher income space than bonds. Increasing the proportion of stock allocation will help to obtain medium and long-term investment return opportunities and help residents better share the fruits of economic growth and the development of high-quality companies.
In the view of many insiders, the medium and long-term allocation value of the A-share market has emerged after preliminary adjustment. Ma Quansheng, chief strategist of Wells Fargo fund, believes that the overall valuation of A-Shares is at a relatively low historical level, and the profitability of enterprises will be the core driving force of A-Shares in the future. From the perspective of valuation, stock bond performance price ratio, investors’ enthusiasm for entering the market, new fund issuance and other indicators, the market has been at the historical relative “freezing point”. Although the short-term market may still fluctuate, there is no need to worry too much in the medium and long term.
Absolute capital will continue to rise into the market
Many insurance asset management companies interviewed believed that from the perspective of time for space, this time or the opportunity to counter the trend.
By the end of 2021, the balance of insurance fund utilization was 23.2 trillion yuan, including 2.5 trillion yuan invested in stocks and 0.7 trillion yuan invested in equity funds. In addition, the balance of portfolio insurance asset management products issued and managed by insurance asset management companies is 3.2 trillion yuan, mainly invested in bonds, stocks, etc.
It is understood that at present, the proportion of equity assets of most large and medium-sized insurance institutions is about 10%, which is still far from the upper limit of the proportion stipulated by the supervision. From past experience, for insurance funds pursuing absolute return, they usually actively look for investment opportunities after the market falls, especially increasing the allocation proportion of high-score red and blue chips.
Soochow Securities Co.Ltd(601555) non bank team believes that there is still room for increasing positions of insurance funds in the future in combination with previous Regulatory Statements.
“The overall valuation of the A-share market has fallen to a reasonable level, and market fluctuations actually provide better buying opportunities and income space. From the perspective of long-term value investment, after the market crash, buying high-quality listed companies with a margin of safety may get an investment return through the bull and bear cycle,” said an internal view sent to investors by a large insurance asset management company in Shanghai
The person in charge of life assets said that in the current A-share market, which has experienced a sharp decline, the valuations of many stocks are at the lowest range in history, and their long-term investment value has been highlighted. Insurance funds can operate against the trend and increase investment, which is of great significance for stabilizing the capital market.
In fact, in order to support the long-term and healthy development of the capital market, the regulatory authorities have reserved space for insurance funds to increase the proportion of equity investment. In July 2020, the China Banking and Insurance Regulatory Commission issued the notice on matters related to optimizing the supervision of the allocation of equity assets of insurance companies, the core of which is to implement differentiated classification supervision on the equity investment of insurance companies. Among them, the independent operation space of high-quality large insurance institutions with huge capital will become larger, and the flexibility and flexibility of allocating equity assets will be enhanced, which can account for up to 45% of the total assets at the end of last quarter, up from 30% in the past.
In fact, the proportion of insurance capital invested by investors in the total equity market has increased steadily from 10% to the end of the quarter, although it is easy to ignore the proportion of insurance capital invested by investors in the total equity market.
