Recently, the Shanghai Composite Index has repeatedly reached new highs over the past decade, with A-share total market capitalization reaching a new milestone, gradually emerging from a "slow bull" market trend.
Behind the index gains and increased trading volume is the influx of various funds, including insurance funds.
According to the latest data from the National Financial Regulatory Administration, as of the end of Q2 2025, China's insurance companies' fund utilization balance exceeded 36 trillion yuan, reaching 36.23 trillion yuan, a year-on-year increase of 17.4%.
Insurance fund equity investments have increased quarter-over-quarter for five consecutive quarters, with funds invested in stocks reaching 3.07 trillion yuan in the first half of this year, representing a net increase of 640.6 billion yuan in the first half, with Q2 alone adding 251.3 billion yuan, setting a new record.
So which sectors and individual stocks have attracted significant insurance funds? What characteristics do insurance funds' heavy position stocks possess? Is there still room for further insurance fund market entry?
**Stock Investment Balance Exceeds 3 Trillion Yuan**
Public data shows that insurance fund market entry in the first half of this year far exceeded previous years.
In 2020, insurance funds added 384.2 billion yuan in stock market investments, and 622.6 billion yuan in 2021. In 2022, as the Shanghai Composite Index fluctuated, insurance funds conducted large-scale reductions in capital markets, with stock investment balances decreasing by 609.8 billion yuan that year. Subsequently, insurance funds maintained cautious operations, adding only 52.3 billion yuan in stock investments in 2023. In 2024, insurance funds changed their previously cautious investment strategy, significantly increasing positions with new stock investments reaching 485.5 billion yuan.
Regarding insurance fund allocation structure, as of the end of Q2 2025, insurance companies' stock investment balance was 3.07 trillion yuan, growing 8.9% from Q1's 2.81 trillion yuan. During the same period, bond assets remained the foundation of insurance fund allocations, with the largest proportion but slower growth. Additionally, bank deposits and non-standard assets continued to decline in insurance fund investment portfolios. Bank deposit balance was 3.02 trillion yuan in the first half, with a net increase of 111.3 billion yuan, accounting for 8.6%; other investments (mainly non-standard) had a balance of 6.58 trillion yuan, decreasing by 187.1 billion yuan in the first half, accounting for 18.8%.
An insurance asset management professional stated that China's long-term bond rate center may remain low long-term, with insurance companies facing downward pressure on net investment returns. Due to rigid liability costs, insurance companies urgently need to increase equity asset allocation to address interest rate spread loss risks, providing motivation for insurance fund market entry.
Xinhuo Private Investment Fund Management Co., Ltd. General Manager Zhai Dan analyzed: "In the first half of 2025, insurance debt investment plan registration scale decreased by over 20% year-on-year, with registration scale continuously shrinking in recent years, and yields gradually declining to 2%-3% levels, causing insurance funds to turn to equity assets seeking higher returns. Meanwhile, the narrowing 'M2 and M1 (highly liquid money) scissors gap' releases fund liquidity, improving fund activation and circulation efficiency, with some bond fund net value retreats further driving insurance funds toward stock markets."
Notably, at the policy level, regulators have introduced a series of new policies creating a more relaxed and favorable environment for insurance funds entering capital markets.
In January 2025, the Central Financial Office, People's Bank of China, Financial Regulatory Administration and other six departments jointly issued the "Implementation Plan for Promoting Medium and Long-term Fund Market Entry," clearly stating the enhancement of commercial insurance fund A-share investment proportions and stability. Based on existing foundations, it guides large state-owned insurance companies to increase A-share (including equity funds) investment scale and actual proportions.
In April of the same year, the Financial Regulatory Administration issued the "Notice on Adjusting Insurance Fund Equity Asset Regulatory Ratios," raising equity asset ratios corresponding to certain solvency adequacy ratios by 5%, with upper limits reaching up to 50%, further expanding equity investment space.
This year, insurance fund investment pilots have accelerated. The second batch of pilots totaled 112 billion yuan, the third batch totaled 60 billion yuan, plus the first batch approved in 2023 with 50 billion yuan scale, bringing total pilot scale to 222 billion yuan. Approved participating insurance institutions mainly include China Life Insurance Company Limited, New China Life Insurance Company Ltd., CPIC Life, Taikang Life, Sunshine Life, PICC Life, Taiping Life, Ping An Life, China Post Life Insurance, and related insurance asset management companies.
Recently, it was learned that Taiping Assets and PICC Assets have successively received approval to establish private securities investment fund management companies, bringing insurance-affiliated securities private companies to seven.
**Preference for High Dividend, High Distribution Stocks**
Insurance fund shareholding campaigns intensified in 2025. According to statistics, since the beginning of 2025, insurance funds have made over 30 shareholding moves involving more than 20 listed companies. Particularly since August, insurance fund shareholding has become increasingly frequent, with seven instances in two weeks.
Regarding the logic behind insurance funds' frequent shareholding actions, the aforementioned insurance asset management professional analyzed that under new accounting standards, more equity assets are recorded as "financial assets measured at fair value with changes included in current profit and loss" (FVTPL), with equity market fluctuations directly affecting insurance company net profits. To smooth performance volatility, many insurance companies choose to increase FVOCI assets (financial assets measured at fair value with changes included in other comprehensive income). After equity investments reach shareholding thresholds, such assets can be recorded as long-term equity investments or FVOCI. Since long-term equity investment book values are relatively stable, investment returns approach invested companies' ROE (Return on Equity), contributing stable long-term returns.
According to statistics, among insurance funds' 30-plus shareholding instances this year, banks became the most favored sector, with seven banks receiving 14 shareholding instances combined.
Why do insurance funds particularly favor bank stocks? Zhai Dan explained: "Under low interest rate backgrounds, bank stocks' high dividend and fixed-income-like advantages are prominent, combined with stable distributions, steady operations, and under new accounting standards, investing in bank stocks through equity method can enhance insurance fund book returns."
Beyond shareholding, from insurance fund heavy position perspectives, this year insurance funds overall prefer large market cap, high dividend, low volatility stocks, especially focusing on companies with high distribution rates and good growth potential.
Listed companies' top ten circulating shareholders' new entry lists are important ways to observe insurance fund movements. Among over 1,600 listed companies disclosing 2025 first-half performance by August 24, in Q2 2025, insurance funds newly entered top ten circulating shareholders of over 120 listed companies. Simultaneously, over 260 listed companies saw insurance fund continuous increases among top ten circulating shareholders. Chemical, machinery, electrical equipment, and telecommunications industries particularly attracted insurance funds, with some listed companies welcoming new insurance fund shareholders, such as Yunnan Yuntianhua Co.,Ltd., Nbtm New Materials Group Co.,Ltd., Zhejiang Zhongjian Technology Co.,Ltd., Zhejiang Jingsheng Mechanical&Electrical Co.,Ltd., and Xiangtan Electric Manufacturing Co.,Ltd.
A life insurance company investment department head stated that Yunnan Yuntianhua Co.,Ltd. belongs to cyclical industries, benefiting from economic recovery with high growth potential; Nbtm New Materials Group Co.,Ltd., Zhejiang Zhongjian Technology Co.,Ltd. and others in high-end manufacturing have high technical barriers, aligning with industrial upgrade directions; electrical equipment companies Zhejiang Jingsheng Mechanical&Electrical Co.,Ltd. and Xiangtan Electric Manufacturing Co.,Ltd. in new energy-related equipment manufacturing benefit from energy transition policies with good growth potential.
Additionally, regarding insurance fund continuous increases, Q2 saw China Life Insurance Company Limited increase positions in China Telecom Corporation Limited, China Mobile Limited, Shenzhen Envicool Technology Co.,Ltd., Jiangsu Nhwa Pharmaceutical Co.,Ltd., China Citic Bank Corporation Limited, and others. Ruizhong Life increased positions in Western Mining Co.,Ltd., Suzhou Sushi Testing Group Co.,Ltd., Hangzhou Ezviz Network Co.,Ltd., China Coal Energy Company Limited, and others. Xintai Life significantly increased Hunan Valin Steel Co.,Ltd. positions reaching shareholding thresholds.
**Focus on High Growth Potential Sectors**
Regarding market attention on insurance funds' future investment directions and key focus sectors, the China Insurance Asset Management Association recently disclosed Q3 2025 insurance asset management industry investor confidence survey results, showing that in the second half, insurance institutions are more optimistic about CSI 300-related stocks, favoring pharmaceuticals, electronics, banking, computers, telecommunications, and defense industries, focusing on artificial intelligence, dividend assets, new quality productivity, high dividend high distribution, and innovative pharmaceuticals investment areas, considering these companies' profit growth as main factors affecting second-half A-share markets.
New China Asset Management Co., Ltd. Deputy Party Secretary and General Manager Chen Yijiang publicly stated that insurance funds as patient capital and long-term capital will shift toward "barbell-shaped" fund utilization orientations and trends. One side grasps stock economy, managing standard products like government bonds; the other side takes new quality productivity as direction, actively deploying new energy, new infrastructure, digital economy, healthcare and other fields, capturing growth opportunities and enhancing returns.
On August 28, at China Life Insurance Company Limited's 2025 interim performance conference, China Life Insurance Company Limited remains optimistic about second-half A-share markets, continuing to focus on sector rotations among rising sectors, such as technology innovation, consumer manufacturing, advanced manufacturing, and new consumption directions.
China Life Insurance Company Limited Vice President and Chief Investment Officer Liu Hui pointed out that China Life Insurance Company Limited will actively implement medium and long-term fund market entry requirements, continuously optimizing equity allocation structures, focusing on new quality productivity and high-quality high dividend stock allocations, constantly improving equity allocation stability and long-term return potential.
The same day, at The People'S Insurance Company (Group) Of China Limited's 2025 interim performance conference, The People'S Insurance Company (Group) Of China Limited Vice President Cai Zhiwei stated that The People'S Insurance Company (Group) Of China Limited's goal is establishing an equity investment portfolio with both investment return stability and market excess return opportunity capture. On one hand, increasing OCI high dividend stock investment efforts, enhancing equity investment performance stability under new standards. On the other hand, continuously optimizing TPL asset (assets measured through profit and loss) position structures, strengthening research depth in key areas and tracks, with TPL stock and fund investment returns ranking top 30% among comparable public funds.
Cai Zhiwei also indicated that The People'S Insurance Company (Group) Of China Limited will continuously enrich equity investment methods, increasing research reserves for quality targets, and for quality targets meeting national strategies, long-term steady operating performance, and development potential, will timely increase investment through shareholding, strategic investment and other methods.
Additionally, Ping An Insurance (Group) Company Of China, Ltd. General Manager and Co-CEO Xie Yonglin at the 2025 interim performance conference clearly stated regarding equity investments that this year market confidence continues warming, with a series of policy "combination punches" jointly strengthening capital market development foundations through market rules, industrial support, risk resolution and other aspects. Various medium and long-term funds are accelerating market entry, driving markets to establish long-term value concepts. He also pointed out that current Chinese market valuation levels remain in reasonable ranges with considerable safety margins, and Ping An Insurance (Group) Company Of China, Ltd. will moderately increase equity allocations around new quality productivity and high distribution directions.
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