To The Moon

While strategic stake acquisitions by insurance capital have long been a familiar phenomenon, their participation methods have undergone a quiet transformation in recent years, evolving from being perceived as "barbarians at the gate" to becoming "strategists in the boardroom." In 2025, insurance funds displayed remarkable activity in the capital markets, publicly triggering disclosure requirements 41 times, marking a decade high. This figure is second only to the peak of over 60 such acquisitions in 2015, yet it signifies a fundamental shift in rationale: moving away from past financial investments and short-term arbitrage towards a long-term investment philosophy centered on strategic synergy and matching long-duration assets. Financial stocks, particularly banks, became the primary focus for increased holdings by insurers, a choice reflecting a rational balance between seeking certainty, safety, and valuation flexibility in a complex market environment. Furthermore, over 80% of these acquisitions occurred in H-shares, primarily driven by their substantial valuation discounts and more streamlined acquisition procedures. The global capital markets in 2025 operated within a macro environment characterized by relatively loose liquidity and recovering growth expectations. Both the Chinese A-share and H-share markets, following prolonged valuation adjustments, exhibited structural upward trends. This was partly due to positive signals from China's domestic economic transformation and upgrading, and partly stemmed from international capital's renewed discovery and allocation towards the value offered by Asia-Pacific markets, especially high-quality Chinese assets. Benefiting from the sustained warming of the stock market, insurance companies generally saw growth in their investment returns, which simultaneously bolstered both the confidence and willingness of insurance capital to make significant acquisitions. This transformed the practice from a defensive asset allocation choice into a proactive capital deployment strategy combining financial returns with strategic positioning. The number of stake acquisitions by insurance capital hit a ten-year high. Throughout 2025, based on incomplete statistics, insurance capital triggered disclosure requirements a notable 41 times, setting a new record for the past decade. This number is more than double the average of recent years and created significant waves in the capital markets. Insurance companies moved from behind the scenes to the forefront, becoming the "invisible helmsmen" for numerous listed companies; what logic and appeal lies behind this shift? Behind the fervor of insurance capital acquisitions lies, first and foremost, a rational choice in asset allocation. Insurance companies manage vast pools of premium income, akin to reservoirs with a continuous inflow of "fresh water." Against the backdrop of declining interest rates and compressed yields on traditional fixed-income assets, equity assets naturally become value洼地 in the eyes of insurance capital. The act of "triggering a disclosure requirement," signifying a shareholding ratio exceeding 5%, not only allows for locking in equity of high-quality listed companies at relatively low valuations but may also, through equity method accounting, shield financial statements from the impact of short-term stock price fluctuations. This is like finding a stable island for long-term anchorage in the turbulent seas of capital. Distinctly different from the rapid, in-and-out style of speculative hot money, insurance capital acquisitions are often imbued with a strong long-termist character. The core characteristics of insurance funds are their long-term nature and stability, which align perfectly with the qualities of many listed companies boasting solid fundamentals, stable cash flows, and high dividend payout ratios. Through deep binding via significant acquisitions, insurance capital can share in the growth dividends of these enterprises and enjoy stable dividend returns, creating a perfect match for the long-term nature of insurance liabilities. It can be said that insurance capital is using the "temperature of patient capital" to smooth out short-term fluctuations in the capital market, achieving genuine value co-creation. The活跃of any capital is inseparable from the soil of regulation. In recent years, adjustments by regulators to the permitted allocation ratios for equity assets by insurance capital have opened a policy window for this acquisition fervor. The regulatory mindset has shifted from "restriction" to "standardization," and further to "encouraging long-term investment," providing insurance capital with more leeway to enter the stock market. Simultaneously, under the policy direction of supporting the real economy and encouraging long-term capital inflows, insurance capital acquisitions are also viewed as an important force guiding funds towards high-quality enterprises and stabilizing the capital markets. This "east wind" has not only warmed the market but also stirred the long-dormant investment ambitions of insurance capital. Bai Wenxi, Chief Economist for China at the China Enterprise Capital Alliance, believes the core reasons for the record-high acquisitions by insurance capital can be summarized in three points: first, regulatory "easing," with optimized solvency监管 standards放大the space for equity investment; second, the pressure of "asset scarcity," as yields on fixed-income assets continue to decline, forcing insurance capital to use high-dividend equity assets to fill the spread gap; and third, the valuation and dividend window, with A/H blue-chip valuations at historical lows and dividend yields普遍above 4%,恰好matching the long-term liability-side cash flow needs of insurance capital. Fifteen insurance companies made moves, with 85% of acquisitions targeting Hong Kong stocks. Fifteen insurance companies triggered disclosure requirements by increasing their holdings in listed companies, predominantly life insurers. Ping An Life Insurance emerged as the undisputed "acquisition champion" of 2025, with a staggering 15 acquisitions throughout the year, leading by a wide margin. Hongkan Life Insurance, China Post Life Insurance, Great Wall Life Insurance, Ruizhong Insurance, New China Life Insurance (601336.SH), and Taikang Life Insurance also conducted multiple acquisitions. On August 7th, Dongyangguang Pharmaceutical, through a new issuance of H-shares (6887.HK) as share consideration, privatized its Hong Kong-listed subsidiary, Yichang Dongyangguang Changjiang Pharmaceutical Co., Ltd. (1558.HK), via an absorption merger. This involved swapping shares originally held by Pacific Property Insurance, Pacific Life Insurance, and their affiliate Taiping Asset Management in Yichang Dongyangguang Changjiang Pharmaceutical Co., Ltd. according to a certain ratio, passively triggering a disclosure requirement. H-shares became the focal point for insurance capital pursuit, with overwhelming statistics of 35 acquisitions, accounting for 85% of the total. This is not merely a string of numbers but a vivid picture depicting capital flows, value judgments, and strategic layouts. Bai Wenxi stated that H-shares offer a "double红利of dividend exemption + discount" for insurance capital, and in 2025, most acquisitions landed on H-shares, making it the most prominent allocation direction. According to relevant fiscal and tax regulations, institutional investors investing in Hong Kong Stock Exchange-listed stocks through the Stock Connect program can be exempted from enterprise income tax on dividend income obtained from holding H-shares continuously for 12 months. For a long time, for many companies listed on both the A-share and H-share markets, their H-share prices have generally traded at a discount compared to their A-shares. This means that for the same company, H-shares offer lower valuations and higher dividend yields. For "smart money" like insurance capital, which emphasizes margin of safety and long-term returns, this is equivalent to buying ownership in the same quality company at a cheaper price. The trading rules for H-shares are also more friendly towards large-scale, long-term investments, enabling insurance capital to complete strategic layouts of core assets with lower costs and higher efficiency. In the selection of acquisition targets, the banking and insurance sectors stood out. Notably, the major acquirer Ping An Life Insurance conducted 4, 4, 3, 2, and 1 acquisitions respectively for the H-shares of Agricultural Bank of China (1288.HK), China Merchants Bank (3968.HK), Postal Savings Bank of China (1658.HK), China Pacific Insurance (Group) Co., Ltd. (2601.HK), and China Life Insurance Company Limited (2628.HK), with its shareholding ratio in Agricultural Bank and China Merchants Bank H-shares both exceeding 20%. Zhengzhou Bank's H-shares (6196.HK) were acquired by Hongkan Life Insurance 4 times, with the shareholding ratio surpassing 20%; New China Life Insurance acquired a stake in Bank of Hangzhou Co., Ltd. (600926.SH). The追捧of bank stocks reflects insurance capital's extreme pursuit of risk aversion and certain returns. During a period of economic growth model transformation, large bank stocks,凭借their systemic importance, stable high-dividend policies, and valuations at historical extremes, provide insurance capital with a rare combination of "high dividends + high safety margin." This is not merely asset allocation but更像a long-term "counter-cyclical" investment in the equity of "financial infrastructure" within an uncertain market, aimed at locking in stable cash flows for decades to come. Beyond this, insurance capital also focused on hard-tech sectors with national strategic attributes, such as new energy, advanced manufacturing, and biotechnology, with the average holding period after a single acquisition延长. This reflects that, against the backdrop of persistently low interest rates and deepening "asset scarcity," leading insurers are systematically building asset allocation capabilities to navigate cycles by actively and deeply participating in the real economy, in order to address long-term spread loss pressures. This move signifies that insurance capital has evolved from mere financial investors into indispensable long-term capital and stabilizing cornerstones in the process of national economic transformation and upgrading. How "appealing" are the returns from insurance capital acquisitions? Stake acquisitions by insurance capital in listed companies are long-term investment behaviors driven by a triple incentive: financial returns, strategic layout, and asset matching. From a financial return perspective, the accounting treatment in financial statements varies for different types of acquisitions. If an investor classifies the held shares as financial assets at fair value through profit or loss, changes in their fair value are directly recorded in current period profit or loss, and dividends are recognized as investment income, potentially reflected in items like "Fair Value Change Gains/Losses" or "Investment Income," causing profits to be affected by stock prices. If an investor classifies the held shares as investments in equity instruments measured at fair value through other comprehensive income, fair value changes are recorded in other comprehensive income, not affecting current period profit or loss, while dividends are recognized as investment income, potentially reflected in items like "Fair Value Change Gains/Losses" or "Other Comprehensive Income," meaning profits are insulated from stock price fluctuations, but net asset value is affected. If an investor obtains significant influence over the investee company through the acquisition, typically with a shareholding ratio between 20% and 50, the equity method of accounting is applied. The investor recognizes its share of the investee's net profit or loss, recorded under the "Investment Income" account. If control is obtained, i.e., the shareholding ratio exceeds 50%, consolidated financial statements must be prepared, incorporating revenue, costs, profits, etc., rather than simply recording investment income. In the 2025 acquisitions, insurance capital's shareholding ratios in listed companies were mostly below 20%. Therefore, dividends from the listed companies and changes in their stock prices affect the insurance companies' investment income and fair value changes. Regarding the fair value change gains/losses item, due to the overall high proportion of bonds, funds, wealth management products, and other asset plans within the financial assets at fair value through profit or loss category, and amidst bond market volatility, the fair value change gains/losses for many insurance companies were negative in the first three quarters of 2025. The holding or disposal of listed company stocks by insurance companies is primarily reflected in the investment income line. In the first three quarters of 2025, with the capital market recovery, insurance companies普遍achieved substantial growth in investment income. Eleven insurers that had made acquisitions disclosed their investment income, all showing positive growth. New China Life Insurance reported investment income of 40.413 billion yuan, a year-on-year increase of 687.16%, ranking first in growth rate and continuing the high growth trend from the previous year, thereby driving a 58.9% surge in net profit attributable to parent company shareholders to 32.857 billion yuan. China Life Insurance Company Limited (601628.SH) and Ping An Life Insurance saw their investment income increase by over 400% year-on-year, while Pacific Life Insurance and Ping An Insurance (Group) Company Of China, Ltd. (601318.SH) achieved doubling growth. Other insurance companies also reported year-on-year investment income growth exceeding 20%. Multiple insurers indicated that they had increased their equity investment allocation in the first three quarters, consequently driving the significant growth in investment income and net profit. The growth in investment income also pushed up the investment return rates. Ping An Life Insurance's investment return rate and comprehensive investment return rate for the first three quarters of 2025 were 3.58% and 13.39% respectively, rising by 1.19 percentage points and 7.95 percentage points compared to the same period in 2024. New China Life Insurance's respective rates were 3.78% and 10.57%, up by 1.61 and 5.56 percentage points year-on-year. The comprehensive investment return rates of companies like Great Wall Life Insurance and China Life Insurance also exceeded 5%. On January 14th, according to an announcement by Pacific Life Insurance, the company increased its holdings in Shanghai International Airport Co.,Ltd. (600009.SH) by 72.424 million shares via block trade on January 9th, raising its shareholding ratio to 4.9994%. Combined with the holdings of its affiliate Taiping Asset Management, the total shareholding ratio reached 5%, triggering a disclosure requirement and firing the "first shot" for insurance capital acquisitions in 2026. Insurance capital acquisitions in 2026 are expected to remain active, with the overall frequency likely staying at the high levels seen in recent years. The core driving force remains insurance capital's pursuit of long-term, stable returns in a low-interest-rate environment, exploring more diversified sector allocations propelled by policy support and market opportunities.