CICC published a report stating that since April, share prices of Chinese-funded insurers have not followed the broader market rebound. Recent roadshows have provided greater insights. The broker believes that the short-term capital overhang may reverse as extremes tend to revert, and the sector is poised for valuation recovery. It favors quality companies and recommends CPIC (02601.HK) -0.420 (-1.275%) Short selling $94.16M; Ratio 29.176% , PING AN (02318.HK) -0.500 (-0.808%) Short selling $396.39M; Ratio 24.730% , CHINA TAIPING (00966.HK) -0.220 (-1.027%) Short selling $26.06M; Ratio 14.268% , CHINA LIFE (02628.HK) -0.180 (-0.605%) Short selling $1.18B; Ratio 43.037% and PICC P&C (02328.HK) +0.200 (+1.296%) Short selling $327.29M; Ratio 27.459% . Please refer to a separate table for target prices.

Regarding the persistent decline in insurance stocks, CICC noted that recent market style has been relatively extreme. Compared with sectors such as technology, insurance lacks attractiveness, leading to capital outflows from funds pursuing short-term relative returns. In addition, continued shareholding reductions by long-term shareholders such as China Securities Finance and related asset management plans in A-share insurers have exerted capital pressure. Some investors also indicated that insurance valuations had already seen some recovery earlier, while earnings elasticity logic is highly volatile and its appeal at current levels is limited.

The report stated that the sector requires a long-term recovery logic rather than merely trading-driven elasticity. Over the past two years, sector share prices have been significantly influenced by equity market return expectations in the short term. An important reason is low valuations and substantial room for upward earnings revisions in both the equity market and insurance sector. The broker had believed at end-2025 that the sector would shift toward valuation recovery, but the rapid rally in early 2026 was again driven by expectations of strong equity market growth. The recent lag in insurance stocks suggests the market is becoming concerned that after a higher earnings base, upside elasticity weakens, and volatile earnings cannot support high valuations. The sector needs a more stable and long-term logic. Interest rates, liability costs and expansion pace are core factors affecting long-term value of life insurers. After considering costs, the pace of liability expansion is the key support for high valuations.

The broker added that a return to growth in the individual agent channel and protection-type products may be the key to deep valuation recovery. It continues to believe that savings products are not only meaningful for achieving growth, but also for attracting high-net-worth clients and high-quality agents, thereby supporting renewed growth in individual agent and protection products. These are the core drivers enabling insurers to differentiate liability costs, enhance long-term profitability and shareholder returns, and achieve valuations comparable to leading international peers. Being satisfied with strong bancassurance growth while neglecting investment and exploration in individual agent and protection products would be counterproductive. (ha/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-18 16:25.)