Chinese Insurers Boost Equity Holdings to Record High

Chinese insurers have increased their equity exposure to 3.1 trillion yuan ($90 billion), the highest level in at least three years. Brokerages expect more buying, with Morgan Stanley estimating over 1 trillion yuan in investments this year. The steady inflow of long-term capital is enhancing market depth and contributing to stable pricing, according to UBS Global Wealth Management. Insurers' preference for dividend-paying stocks and sector leaders also contributes to market stability.

Chinese insurance firms have significantly increased their equity exposure, reaching 3.1 trillion yuan ($90 billion) in the first half of 2025, the highest level in at least three years. This surge in equity holdings is part of Beijing's strategy to build a slow and steady bull market. According to regulatory data, equity holdings by the cohort rose by 640 billion yuan ($90 billion) from the previous year, with Morgan Stanley estimating that insurers will invest more than 1 trillion yuan into China and Hong Kong shares this year Chinese Insurers' Stock Buying Bolsters Case for Slow Bull ...^[1]Chinese Insurers’ Stock Buying Bolsters Case for Slow Bull Run^[2].

The wave of purchases reflects a growing confidence in the market, which has posted world-beating gains due to continued policy support. The onshore benchmark rallied 10% in August, ranking among the top performers globally Chinese Insurers’ Stock Buying Bolsters Case for Slow Bull Run^[2]. The steady inflow of long-term capital from insurers is enhancing market depth and contributing to more stable pricing, according to UBS Global Wealth Management. This preference for dividend-paying stocks and sector leaders also helps to anchor market valuation and liquidity Chinese Insurers’ Stock Buying Bolsters Case for Slow Bull Run^[2].

Regulatory changes have played a significant role in this shift. Authorities have mandated that large state-owned firms allocate 30% of new policy premiums to onshore equities and have raised insurers' equity investment cap, reducing capital requirements to hold stocks and improving their ability to weather market volatility Chinese Insurers’ Stock Buying Bolsters Case for Slow Bull Run^[2]. This regulatory push, coupled with deepening troubles in China’s property sector, has led insurers to increase their equity exposure Chinese Insurers’ Stock Buying Bolsters Case for Slow Bull Run^[2].

While the increase in equity exposure comes with risks, such as greater fluctuations in net asset value during market downturns, the long-term benefits for the market are substantial. China Life Insurance Co., for instance, saw a 317% increase in net investment income in the first half of 2025, contributing to a 6.9% profit rise Chinese Insurers’ Stock Buying Bolsters Case for Slow Bull Run^[2]. However, Ping An Life Insurance Group Co. experienced a 20% decline in investment income, highlighting the varying impacts of market fluctuations Chinese Insurers’ Stock Buying Bolsters Case for Slow Bull Run^[2].

CGS International expects China Life Insurance to deliver stronger results in the second half of 2025, with policy changes and market recovery supporting margins and investment income China Life Insurance outlook lifted as CGS raises forecasts^[3]. The cut in guaranteed rates for life and participating insurance policies, effective from September 1, is forecast to lift margins and new business value (NBV) growth. CGS International expects NBV margins to improve, helping offset earlier weakness in first-year premiums.

In conclusion, the increasing equity exposure by Chinese insurers is a significant development that is reshaping market dynamics and contributing to a more stable and resilient market environment. As more insurers return to the market and China’s stock recovery gains traction, these pressures are likely to ease over time, marking a structural shift in the country’s financial landscape.

References:
Chinese Insurers' Stock Buying Bolsters Case for Slow Bull ...^[1] https://news.bloomberglaw.com/securities-law/chinese-insurers-stock-buying-bolsters-case-for-slow-bull-run
Chinese Insurers’ Stock Buying Bolsters Case for Slow Bull Run^[2] https://www.bloomberg.com/news/articles/2025-09-09/chinese-insurers-stock-buying-bolsters-case-for-slow-bull-run
China Life Insurance outlook lifted as CGS raises forecasts^[3] https://insuranceasia.com/insurance/news/china-life-insurance-outlook-lifted-cgs-raises-forecasts