CMSC released a research report stating that the recent reduction in eligible stock investment risk factors will create additional room for insurance funds to flow into the stock market. Assuming a 15% annual growth in insurance fund utilization and an average stock investment ratio of 9.7%, this could potentially bring approximately 545 billion yuan in incremental insurance funds by 2026.
Regarding external liquidity, recent economic data has further bolstered expectations of a Fed rate cut, while the Bank of Japan Governor hinted at a possible near-term rate hike, intensifying speculation about Japanese monetary tightening. The US dollar index has shown a fluctuating downtrend.
Key insights from CMSC include:
**Impact on A-shares from Lower Insurance Fund Risk Factors** Since 2025, regulators have systematically guided insurance funds—as "patient capital"—into the market through measures such as raising investment ceilings, expanding pilot programs, optimizing long-term assessments, and fine-tuning risk factor reductions. The latest adjustment in eligible stock investment risk factors will further unlock incremental capital for equities.
As of September 2025, insurance fund utilization stood at 37.5 trillion yuan, up 17% year-on-year, contributing an estimated 347.7 billion yuan in incremental funds for the first nine months of 2025. Looking ahead to 2026, premium growth coupled with policies encouraging long-term capital inflows could drive substantial additional funds. Assuming a 15% annual growth in insurance fund utilization and a 9.7% average stock allocation, this may inject around 545 billion yuan in fresh capital.
**Monetary Policy and Interest Rates** Last week (12/1–12/5), the central bank conducted a net withdrawal of 848 billion yuan via open market operations, with 663.8 billion yuan in reverse repos set to mature in the coming week. Money market rates declined, short-term government bond yields edged down, while long-term yields rose. The issuance scale of interbank certificates of deposit (NCDs) shrank, with issuance rates climbing.
As of December 5, R007 fell by 2.6 basis points (bp), DR007 dropped 2.9bp, the 1-year government bond yield remained flat, and the 10-year yield rose 0.7bp. NCD issuance volume decreased by 69.33 billion yuan, with 1M/3M/6M NCD rates all trending upward.
**Capital Supply and Demand** Secondary market data showed net inflows. Margin financing balances increased, with net purchases of 7.64 billion yuan. ETFs saw net inflows of 3.12 billion yuan, and new equity-oriented mutual fund offerings expanded. Major shareholders' net减持规模 rose, while announced减持 plans expanded.
**Market Sentiment** Margin trading activity weakened last week, and equity risk premiums declined. Sectors drawing heightened attention included consumer discretionary, cyclical, and consumer staples. The VIX index retreated, reflecting improved risk appetite in overseas markets.
**Sector Preferences** Electronics, machinery, and non-ferrous metals attracted significant net inflows across capital types. Broad-based ETF subscriptions were mixed, with双创50ETFs seeing higher inflows and上证50ETFs experiencing redemptions. Sector ETFs also showed divergence, with healthcare ETFs gaining subscriptions and financial/real estate (excluding brokers) ETFs facing outflows.
The highest net subscriptions were recorded for Huatai-PineBridge CSI A500 ETF, while the highest redemptions were seen in Huabao CSI Bank ETF.
**Global Developments** Economic data reinforced Fed rate cut expectations, while Japan’s rate hike prospects gained traction. US ADP employment fell by 32,000 in November, missing forecasts of a 10,000 increase. The ISM Manufacturing PMI stood at 48.2, below the expected 49, marking the ninth consecutive month of contraction. Bank of Japan Governor Ueda signaled a potential near-term rate hike.
**Risk Warnings** Potential downside risks include weaker-than-expected economic data or policies, and tighter-than-anticipated overseas monetary tightening.
Comments