China Securities Co., Ltd. released a research report stating that with policy support, the proportion of "patient capital" from insurance funds entering the market is gradually increasing, and their long-term investment nature is profoundly influencing the recent style of the A-share market. Concurrently, the expanded application of the OCI account, which effectively smooths fluctuations in the profit and loss statement, has significantly boosted the trend of insurance funds' allocation demand for high-dividend, low-volatility stocks. Leading home appliance companies, with their long-standing rare advantages of high dividends, stable growth, and low valuations, deeply align with the allocation logic of insurance funds' OCI accounts; they are expected to fully absorb the sustained inflow of expanding insurance capital, thereby achieving a steady rise in valuation midpoints and a re-rating of value. The firm is optimistic about the long-term valuation improvement of the white goods sector against the backdrop of insurance capital expansion and the development of OCI accounts. The main views of China Securities Co., Ltd. are as follows: First, the increasing proportion of insurance funds entering the market is profoundly influencing the A-share market style in recent years. In recent years, to support the healthy development of the capital market, regulatory authorities have successively introduced multiple policies explicitly encouraging insurance funds to increase their allocation to equity assets and promoting long-term, stable investment by insurance funds in the equity market. Guided by these policies, both the scale and proportion of insurance fund allocations in the stock market have shown a significant upward trend. The firm estimates that by 2026, insurance investment funds entering the market will reach 0.53 to 1.33 trillion yuan, constituting the main incremental capital in the capital market within the year. Second, the rapid expansion of OCI accounts brings long-term incremental funds to high-dividend assets. Under the framework of the new accounting standards (IFRS 9 & 17), the OCI account (financial assets measured at fair value through other comprehensive income) allows insurance companies to effectively smooth volatility and stabilize profit performance, with its proportion increasing significantly in recent years. Core home appliance stocks, possessing bond-like characteristics of high dividends and low volatility, deeply match the allocation logic of insurance funds' OCI accounts and are expected to attract long-term incremental funds, leading to a steady increase in their valuation midpoints. Third, quantitative estimates of insurance fund inflows into the home appliance industry. A horizontal comparison shows that the allocation proportion to home appliances remains significantly lower than sectors like banking, non-bank finance, and utilities, indicating substantial room for increased allocation within the "high-dividend" allocation theme. The firm estimates that by 2026, the home appliance industry is expected to receive approximately 96 billion yuan in insurance fund inflows, accounting for about 5.4% of the combined market capitalization of stocks valued over 10 billion yuan. The expansion of insurance capital provides significant support for the core assets of the home appliance industry. Risk warnings: Economic growth falling short of expectations, significant fluctuations in raw material prices, overseas market risks, and intensifying market competition.
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