A major insurance player has drawn market attention by selling shares in a leading semiconductor company just before its price tumbled. China Life Insurance Company Limited (SH: 601628), which is also known as CHINA LIFE (HK: 02628), recently executed a strategic sale of Gigadevice Semiconductor Inc. (SH: 603986), also known as GIGADEVICE (HK: 03986).
This move comes after the insurer forecast a massive profit surge for the first half of the year, ranging from 128.93 billion to 137.12 billion yuan. The strong performance is largely attributed to its investment strategy, which includes betting on technology stocks while also holding a large portfolio of high-dividend bank stocks and other blue-chip shares as a stabilizing force. In the first quarter alone, its combined holdings in three major banks, including Industrial and Commercial Bank of China, were valued at 25 billion yuan.
Sold before the big drop
While many retail investors were caught off guard by the recent tech stock correction, the insurance giant managed to exit its position in Gigadevice at a favorable time. The company disclosed that eight of its asset management plans sold approximately 1.11 million shares of Gigadevice on July 8, realizing about 682 million yuan at a price range of 611.46 to 624.61 yuan per share.
Looking at the stock's price history, the timing of China Life's sale appears highly precise. As one of the most sought-after memory chip leaders on the A-share market, Gigadevice's stock had been on a tear since the second half of 2025, surging from around 100 yuan to a peak of 846.66 yuan on July 2. However, the trend reversed sharply, and by July 29, the stock had fallen to 364.03 yuan. The insurance company's sale occurred just as the decline began, with the closing price on the day of the transaction at 603.17 yuan, allowing it to lock in substantial profits and avoid the subsequent steeper losses.
The exact profit from the Gigadevice investment is difficult to calculate as the specific purchase dates for the eight asset plans are not public. Insurance funds are typically viewed as "long-term capital" and "patient capital." Interestingly, on the same night it disclosed the sale of Gigadevice, the parent company, China Life Group, publicly reiterated its commitment to the Chinese capital market, promising to provide stable, long-term funding. Some observers have pointed out a contradiction between this stated commitment and the sale of shares at a relatively high price.
In response, China Life stated that its stock managers' decisions to buy or sell individual stocks in the secondary market are routine investment actions based on portfolio allocation needs. Angel investor Guo Tao commented that the perception of a conflict confuses the boundary between holding a long-term sector position and actively managing individual stock positions. He argues that the sale is a standard and conventional operation for insurance capital and does not violate the principles of long-term value investing. The long-term investment by insurance funds refers to the overall industrial trend of sectors like semiconductors, not a permanent hold on any single stock. Given Gigadevice's massive short-term gains, which have potentially priced in future performance, the risk of a correction was high. Insurance funds, which have rigid liability payouts, are required to lock in high floating profits and control net asset value volatility. He believes the synchronized sale by eight different asset management plans, with a uniform price range, points to a standard risk control rebalancing action at a mid-year review point, rather than a bearish view on the domestic memory chip sector.
Investment drives strong performance
Even before the Gigadevice sale, China Life's investment activities were in the spotlight. The strong stock market performance in 2025, coupled with policy incentives, led insurance companies to significantly increase their equity investments. Data from the National Financial Regulatory Administration shows that by the end of 2025, total insurance fund utilization had reached approximately 38.5 trillion yuan, a 15.7% year-on-year increase. Of this, investments in stocks and securities investment funds totaled about 5.7 trillion yuan, a jump of nearly 1.6 trillion yuan, with the growth of equity assets notably outpacing the overall asset scale.
As a leading life insurer, China Life had total assets of 7.59 trillion yuan, with 7.42 trillion yuan allocated for investment. The company showed a clear preference for equity investments, with 835.3 billion yuan in stocks and 421.8 billion yuan in funds. The allocation ratio for stocks and funds rose from 12.18% at the end of 2024 to 16.89%. In its investment analysis, China Life stated it was actively promoting the entry of long-term funds into the market, decisively increasing equity investment, actively investing in new quality productive forces, and steadily building a portfolio of high-dividend stocks.
By the end of 2025, China Life's traditional, participating, and universal insurance products were heavily invested in the circulating shares of 165 A-share listed companies. Which stocks contributed most to its gains? In terms of the increase in market value of its holdings, its investments in Industrial and Commercial Bank of China, China CITIC Bank, and Bank of Nanjing saw their values rise by 3.668 billion, 1.826 billion, and 1.196 billion yuan, respectively, all under the condition of significant additional purchases. National energy stocks like China Petroleum & Chemical Corporation, China Shenhua Energy, and SDIC Power Holdings also saw significant increases, with the market value of its holdings rising by 585 million, 459 million, and 293 million yuan, respectively. These stocks are part of its "high-dividend stock allocation" strategy. In the new quality productive forces sector, the market value of its holdings in Dongshan Precision Manufacturing increased by 1.057 billion yuan, in Yuanjie Technology by 383 million yuan, and in Sungrow Power Supply and Sanhua Intelligent Controls by over 200 million and 100 million yuan, respectively. Additionally, holdings in Hikvision Digital Technology and Yili Industrial Group saw market value increases of over 1 billion yuan each.
These bets paid off handsomely. In 2025, the company's total investment income surged to 387.694 billion yuan, a 25.8% year-on-year increase, with a total investment yield of 6.09%, up 59 basis points. During the same period, its net profit attributable to shareholders reached 154.078 billion yuan, a strong 44.1% year-on-year growth. The company continued this strategy into 2026. While the latest second-quarter holdings are not yet public, data from Wind shows that as of the end of the first quarter of 2026, China Life's insurance products held shares in 181 listed companies, an increase of 16 from the end of the previous year. Among the stocks with the largest year-on-year increases in market value, three were bank stocks: China CITIC Bank, Bank of China, and Industrial and Commercial Bank of China. The total market value of these three bank holdings reached 25 billion yuan, with each seeing increases of 2 to 3 billion yuan. China Shenhua Energy and Yuanjie Technology also saw gains of 1.5 billion yuan and nearly 500 million yuan, respectively. Looking at total market value of holdings, the top five stocks, each with holdings exceeding 10 billion yuan, were China United Network Communications, Ping An Insurance Group, Midea Group, Industrial and Commercial Bank of China, and China Yangtze Power. Of the top 20, eight were bank stocks. For the hot semiconductor sector, besides Yuanjie Technology, China Life also invested in Yake Technology, Changjiang Electronics Technology, and Zhongke Feice. However, compared to the top five, its holdings in semiconductor companies were valued at only just over 1 billion yuan. This shows that China Life uses high-dividend bank and blue-chip stocks as a foundation, supplemented by growth stocks for potential upside, creating a balanced equity allocation strategy.
True to form, investment once again proved to be the main driver of China Life's strong performance. A performance forecast released on July 14 indicated that net profit attributable to shareholders for the first half of the year is expected to be between 128.933 billion and 137.119 billion yuan, a year-on-year increase of 215% to 235%. In explaining the reasons for the expected surge, the company cited the continuous optimization of its asset allocation and the steady progress in its layout of new quality productive forces, which has yielded good investment results.
Offensive strategy amplifies equity returns
The impressive investment results are closely tied to Liu Hui, the company's Vice President, Chief Investment Officer, and Board Secretary. Born in 1970, she is a veteran in the insurance investment field, having joined China Life in 2005. She has held various senior positions, including General Manager of the Trading Management Department and Investment Management Department at China Life Asset Management Company, and Vice President of China Life Investment Holding Company. Since 2023, she has taken on key roles, being appointed Vice President and Chief Investment Officer, and officially qualifying as Board Secretary in 2025.
Liu Hui has publicly outlined China Life's investment logic on multiple occasions. At the 2025 results conference, she summarized the company's strategy into three points: seizing the opportunity to confidently increase investment in Chinese assets to capture the alpha of new quality productive forces, especially by deploying capital during market downturns into tech stocks representing this direction; adapting to the falling interest rate environment by increasing the allocation of high-dividend stocks to build a diversified income portfolio; and following market trends with flexible tactical adjustments and strategy optimization. She stated that equity investment is the key to enhancing returns, fixed-income investment is the anchor for stable returns, and alternative investments are the growth driver for diversifying income. The broader trend among listed insurers in recent years is to increase equity investment. A study by Dongwu Securities found that by 2025, the core equity assets of China Life, Ping An, PICC, CPIC, and New China Life had grown by 55.7%, 117.5%, 72.6%, 32.8%, and 26.7%, respectively. However, their net profit growth rates for 2025 were 44.1%, 6.5%, 8.8%, 19%, and 38.3%, respectively. This reveals an interesting phenomenon: China Life and New China Life did not have the highest equity investment growth rates, yet their net profit growth was significantly faster than the other three. The reason lies in their financial accounting methods. Under the new accounting standards implemented in 2023, stock assets invested by insurers are typically classified into two categories: FVTPL (Fair Value Through Profit or Loss), where gains and losses are recorded in the profit statement, and FVOCI (Fair Value Through Other Comprehensive Income), where gains and losses are not recorded in the profit statement. If an insurer has fewer assets classified as FVTPL, its profit is less affected by market fluctuations. Conversely, a higher proportion of FVTPL assets makes profit more directly and violently sensitive to market movements. According to a report by Orient Securities, by the end of 2025, the proportion of FVTPL stocks in the total investment portfolio of China Life, Ping An, CPIC, New China Life, and PICC were 8.1%, 6.4%, 7.0%, 9.1%, and 5.0%, respectively. As a proportion of their total stock assets, these figures were 72.2%, 43.5%, 63.0%, 81.4%, and 57.6%. This shows that both New China Life and China Life have a relatively high proportion of stocks classified as FVTPL, both in their overall portfolio and their stock assets. This acts as an amplifier for the impact of market volatility on profits. This explains why China Life and New China Life saw much higher net profit growth than their peers in the bull market of 2025. It also explains why China Life's profit saw a significant 32.3% year-on-year decline during the market correction in the first quarter of 2026, a direct consequence of this high-FVTPL strategy.
An expert from the Credit Management Committee of the All-China Federation of Industry and Commerce suggests that under the new accounting standards, insurer asset allocation should focus on asset-liability matching, increasing allocation to high-dividend, low-volatility and index-based investments, diversifying single-stock risk, control positions in growth equities, use private equity for long-term returns, and use derivatives for hedging when necessary, rather than chasing trends for accounting profit. Notably, beyond increasing its equity allocation, China Life is also boosting its investment in the tech industry by setting up funds. These include a 4 billion yuan contribution to the Yangtze River Delta Artificial Intelligence Fund, focusing on AI, integrated circuits, and biomedicine; a 2.8 billion yuan contribution to a private equity fund partnership covering strategic emerging industries like new-generation IT, biomedicine, advanced manufacturing, new materials, new energy, and energy conservation; and a nearly 5 billion yuan contribution to a semiconductor industry equity investment fund. The minimum term for these funds is 8 years, with a maximum of 10 years. This approach differs significantly from its routine equity investments. Guo Tao believes that secondary market investments serve as a financial allocation tool, while these industry funds are designed to support the industry, position the company strategically in the sector, and deeply integrate into the semiconductor and AI supply chains. This allows the company to unearth the long-term growth value of unlisted companies, perfecting the insurer's full-cycle layout in the science and innovation field, thus creating a complementary investment system across the primary and secondary markets.
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