SCIO briefing on actively encouraging the flow of medium- and long-term funds into the capital market and promoting its high-quality development

ThePaper.cn:

We know that insurance funds is characterized by its long-term nature, which make it an important source of institutional investment. Given this, could you elaborate on the NFRA's considerations for guiding insurance funds' flow into the stock market? Thank you.

Xiao Yuanqi:

Thank you very much for your concern and attention to the insurance industry. We know that in September 2024, the State Council issued the Opinions on Strengthening Supervision to Prevent Risks and Promote High-Quality Development of the Insurance Industry, and I have provided an interpretation of it here for everyone. The opinions proposed to leverage the long-term investment advantages of insurance funds and cultivate genuine patient capital. This would promote a positive cycle of funds, capital and assets. The NFRA has resolutely implemented the decisions and arrangements of the CPC Central Committee and the State Council, continuously guiding insurance funds to increase their investments in the stock market. Currently, insurance funds' investments in stocks and equity funds have exceeded 4.4 trillion yuan.

From the perspective of insurance fund utilization, the capital market and equity in unlisted companies are the main investment directions. Currently, the proportion of investment in stocks and equity funds is 12%, and the proportion of investment in unlisted company equity is 9%. Combined, these two account for 21%, reflecting the advantages and determination of insurance funds as patient capital and long-term capital in long-term investment.

Insurance companies retain considerable potential and scope for equity investments, with increased stock allocation representing a sound strategy and choice for current insurance fund asset management. We will further optimize and refine policies related to insurance fund investments, encouraging insurance funds to steadily increase their stock market investment ratios. In particular, large state-owned insurance companies should play an exemplary role, striving to allocate 30% of new premiums annually to stock market investments and working to steadily increase insurance funds' stock market investment ratios based on current levels. These are the "two strivings." This will fully leverage insurance funds' positive role as institutional investors in long-term and value investing. Thank you for your question.