CBN丨China to guide billions of dollars of insurance money into stocks

Hi everyone. I’m Stephanie LI.

Coming up on today’s program

• China rolls out medium- and long-term investment plan, with state-owned insurers to invest 30% of new premiums in A-shares from 2025;
• Guangzhou Baiyun International Airport becomes first in the GBA to have four runways.

Here’s what you need to know about China in the past 24 hours

Multiple Chinese government departments, including the securities regulator and the central bank, rolled out on Wednesday an implementation plan, vowing to promote inflows of medium- and long-term capital into the stock market, an effort that experts said would boost confidence and stabilize business growth.

The plan emphasized the importance of encouraging medium- and long-term investment funds - such as commercial insurance funds, the national social security fund, basic pension funds, enterprise annuity funds and public funds - to boost their presence in the stock market.

Specifically, Wednesday's plan aims to enhance the proportion and stability of commercial insurance funds that are invested in A-shares. It seeks to guide large state-owned insurance companies to expand their A-share investments (including equity funds) in both scale and proportion.

A long-term performance assessment cycle of at least three years will be introduced for state-owned insurance companies, with annual net asset returns weighted no more than 30 percent and three- to five-year performance indicators weighted at least 60 percent, the plan said.

Starting from 2025, 30 percent of new annual premiums will be allocated to A-share investments, Wu Qing, head of the China Securities Regulatory Commission (CSRC), told a press conference on Thursday.

The second round of pilot programs for long-term equity investments by insurance funds, with a scale of no less than 100 billion yuan, will be rolled out without delay, Wu said.

According to the the National Financial Regulatory Administration today, the first batch of the pilot ran smoothly, which began in October 2023 when the bureau approved China Life Insurance and New China Life Insurance to raise 50 billion yuan to establish a private equity fund for long-term investment in yuan-denominated stocks.

Additionally, the market value of A-shares held by public funds is expected to increase by at least 10 percent annually over the next three years, Wu noted.

The plan also proposes optimizing the investment management mechanisms for the national social security fund and basic pension funds. Public funds, state-owned commercial insurance companies, basic pension insurance funds, and annuity funds should lay out and implement three-year assessments, Wu said today.

Efforts will also focus on improving the market-oriented operation of enterprise annuity funds, such as introducing long-term performance assessment guidelines for enterprise annuity funds and supporting eligible employers in exploring individual investment options for annuities.

Moreover, the plan aims to expand the scale and proportion of equity funds, and encourage listed companies to increase share buybacks and implement policies for multiple dividend distributions annually.

In 2024, over 300 listed companies, of which more than 40 percent are enterprises with a market capitalization of over 10 billion yuan, have announced plans to apply for loans for stock buybacks and shareholding increases, with the potential total amount exceeding 60 billion yuan, according to the central bank today. The PBOC also announced that it has reached agreements with nearly 800 listed companies and major shareholders on these loans.

Greater Bay Area, Greater future

• The fourth runway of Guangzhou Baiyun International Airport officially opens today, with CZ6731 flight landed smoothly on the runway at 8:10 am. The airport becomes the first and sole airport with four runways in the Greater Bay Area, injecting fresh momentum into the economic development of the region and consolidating Guangzhou’s position as an international comprehensive transportation hub.
• More than half of the talents who moved to the Hong Kong SAR through its Top Talent Pass Scheme (TTPS) have been in employment, according to the city’s labor chief on Wednesday. The scheme received over 116,000 applications as of December last year, and approved nearly 92,000. Of those approved, more than 75,000 have already arrived in Hong Kong with their families. The talents in employment mainly took up managerial and professional jobs with median monthly employment earnings of about HKD50,000, with a quarter of them earning HKD100,000 or above.

Next on industry and company news

• China's total expenditure on research and development (R&D) exceeded 3.6 trillion yuan last year, up 8.3 percent year on year, the National Bureau of Statistics said Thursday.
• Chinese banks have approved 5.6 trillion yuan worth of loans to property projects under a mechanism to support the construction and delivery of 14 million homes, the National Financial Regulatory Administration said on Wednesday. Credit lines to “whitelisted” projects issued by commercial banks reached 5.03 trillion yuan in 2024 exceeding the target of 4 trillion yuan, and the figure further increased by 570 billion yuan to 5.6 trillion yuan as of yesterday.
• CNOOC, China's largest producer of offshore crude oil and natural gas, said on Wednesday that production will continue to grow in 2025, with daily net production to exceed 2 million barrels of oil equivalent (BOE). Compared with 2024's net production total, which is estimated to be around 720 million BOE, the net production target for 2025 is between 760 million and 780 million BOE.

Switching gears to financial news

• Over 310 listed companies in China likely handed year-end dividends to investors this month and the last, with a total worth of around 340 billion yuan, CSRC’s Chairman Wu Qing said today. Meanwhile, as of the end of last year, a total of 866 Qualified Foreign Institutional Investors (QFIIs) had received investment approval, and foreign investors held about 3 trillion yuan in A-shares through QFII and the Stock Connect program. And a total of 26 foreign-controlled or foreign-invested securities companies, fund companies, and futures companies, obtained approval from Chinese regulators.

Wrapping up with a quick look at the stock market

• Chinese stocks ended mixed on Thursday. The benchmark Shanghai Composite gained 0.5 percent while the Shenzhen Component slid 0.5 percent. Hong Kong’s Hang Seng index closed 0.4 percent lower and the TECH index dropped 1.4 percent.

Executive Editor: Sonia YU

Editor: LI Yanxia

Host: Stephanie LI

Writer: Stephanie LI

Sound Editor: Stephanie LI

Graphic Designer: ZHENG Wenjing, LIAO Yuanni

Produced by 21st Century Business Herald Dept. of Overseas News.

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