In 6 months, spent HKD 180 billion! Ping An "sweeps" H-shares of banks

Ping An Insurance and other mainland insurance companies have significantly increased their holdings in domestic large bank stocks, betting that high dividend yields will offset the adverse factors of narrowing profit margins and pressure on earnings in the banking sector.

On June 24, according to Bloomberg's calculations based on exchange data, Ping An Insurance has significantly increased its holdings in several large banks listed in Hong Kong since the end of 2024, with a total holding size reaching HKD 180 billion (USD 23 billion). This round of buying has pushed its stake in ICBC's Hong Kong shares to 18%, and its holdings in China Merchants Bank and Agricultural Bank of China have also risen to over 15%.

Analysts point out that the combination of low valuations and high dividend yields in Hong Kong bank stocks provides a more attractive allocation option for insurance funds. This trend also highlights the market's urgent demand for high-yield assets.

With the concentrated inflow of insurance funds, the banking sector has recently surged, with the Hong Kong-listed Chinese bank index reaching a seven-year high. Individual stocks like CITIC Bank have even hit historical highs, and Agricultural Bank of China also closed at its highest level since its listing in 2010 on Tuesday.

Insurance Funds Favor High Dividend Assets

According to Securities Times, on January 23 this year, China Securities Regulatory Commission Chairman Wu Qing stated that large state-owned insurance companies should be guided to increase their investment scale and actual proportion in A-shares, with 30% of new premiums each year from 2025 onwards to be used for investing in A-shares.

In contrast, bank stocks traded in Hong Kong show greater attractiveness due to cheaper valuations and higher dividend yields. The average dividend yield of large Chinese banks listed in Hong Kong exceeds 4%, while the benchmark 10-year government bond yield is only 1.65%.

Yang Bo, Investment Director of Qianhai Kaiyuan Fund in Shenzhen, stated: "Historically low valuations and high dividend payments make bank stocks an inevitable choice for long-term investors seeking dividend income or looking to establish defensive positions."

Ping An Insurance stated that the low volatility and high dividends of bank stocks will contribute to considerable interest income. Ping An Insurance also pointed out:

It will adhere to a balanced investment strategy of growth stocks and high dividend value stocks, and increase non-bank stocks in the portfolio to diversify risks.

It is worth noting that Ping An Insurance is not the only insurance company making significant purchases of bank stocks. Ruida Insurance increased its stake in CITIC Bank in Hong Kong from 4.98% to 5% this March. Xinhua Life Insurance acquired 5.45% of Hangzhou Bank from the Commonwealth Bank of Australia in January.

Insurance Capital Purchases Drive Bank Stock Surge

This wave of buying has driven the entire sector's upward trend. CITIC Bank, as one of the best-performing stocks this year, has reached a historical high, and Agricultural Bank of China also closed at its highest point since its listing in 2010 on Tuesday.

Despite strong stock performance, Chinese banks still face record-low profit margins and slow profit growth.

Yang Bo warned that while this momentum may continue in the short term, the sustainability of the bank stock rally remains to be seen, as banks are still dealing with issues such as shrinking profit margins and high funding costs

"The stock performance has deviated from the fundamentals of the bank, and we need to observe whether the bank's credit expansion can translate into real economic activity."