Open source securities: Stable stock market policies continue to be implemented. The central bank report proposes four strategies to address the risk of interest rate spread losses for insurance companies.

Open source securities released a research report stating that the stock market has fallen. The China Securities Regulatory Commission officially refuted rumors that "regulatory authorities instructed listed companies to release all negative news before January 15, as well as large redemptions of public funds by insurance companies." In addition, the second phase of the SFISF interchange convenience bid was completed, bank loans supporting listed companies' buybacks, and tools for shareholders to increase their holdings were further optimized. The regulatory authorities have released positive signals to stabilize the stock market, which is conducive to boosting confidence in the equity market. Key points of Open source securities: Weekly viewpoint: Policies to stabilize the stock market have been successively implemented, and the central bank's report discusses how insurers should hedge interest rate risks. This week, the stock market has fallen, and the China Securities Regulatory Commission officially refuted rumors that "regulatory authorities instructed listed companies to release all negative news before January 15, as well as large redemptions of public funds by insurance companies." In addition, the second phase of the SFISF interchange convenience bid was completed, with an operational amount of 550 billion yuan (the first phase had an operational amount of 500 billion yuan, with over 90% actually deployed). The list of participating institutions in the second phase has expanded by 20 to 40, and China Securities Depository and Clearing Corporation has stated that it will halve the registration fee for SFISF securities pledging. The second phase of SFISF is conducive to providing liquidity to the stock market and playing a role in stabilizing the stock market. Financial regulators have adjusted and optimized policies related to stock repurchases and shareholder loan repayments, including increasing financing ratios, extending loan terms, and broadening the scope of application, further lowering participation thresholds. In the past two weeks, the average daily turnover of stock funds has remained around 1.5 trillion yuan, coupled with a low base, it is expected that the performance of securities companies in the fourth quarter of 2024 and the first quarter of 2025 will increase significantly year-on-year. The valuation level of the securities sector is still relatively low, and we continue to recommend securities targets with low valuations and prominent retail advantages. Insurance: Long-term interest rates continue to decline, and the central bank's report proposes four strategies to address interest rate risk for insurers. As of January 3, the yields of 30-year and 10-year government bonds have dropped to 1.81% and 1.61% respectively. The central bank's work meeting took place on January 3-4, mentioning the possibility of reserve requirement ratio cuts and interest rate reductions to fully leverage the macro-prudential and financial stability functions of the central bank. In the 4th quarter financial stability report of the central bank, attention is paid to the interest rate risk for insurers, with four strategies proposed: continuous promotion of the industry to lower debt costs (pricing interest rates and ceiling of demonstration interest rates), enriching product supply (increasing the proportion of floating interest products), increasing the supply of long-term bonds, and improving the long-term evaluation and assessment system for life insurance companies (considering adopting cautious counter-cyclical adjustment measures in terms of solvency, regulatory equity asset ratio exemptions, etc.). The bank predicts that strong demand for pensions, continued effectiveness of product and channel transformation, combined with rate adjustments, product structure optimization, and the merger of individual insurance and bancassurance, will slightly boost the value rate, while top insurers in the first quarter of 2025 are expected to achieve double-digit growth in new business value. The focus is on asset-side beta catalysis and optimistic about investment opportunities with prominent equity elasticity targets. Recommended and benefiting targets: Recommended targets: Caitong (601108.SH), Orient (600958.SH), East Money Information (300059.SZ), Industrial (601377.SH), Guolian (601456.SH), HKEX (00388); China Life Insurance (601628.SH), Ping An Insurance (601318.SH), China Pacific Insurance (601601.SH); Jiangsu Financial Leasing (600901.SH). Benefiting targets: Guosen (002736.SZ), CMSC (600999.SH), China Galaxy (601881.SH), New China Life Insurance (601336.SH); Hithink RoyalFlush Information Network (300033.SZ), Beijing Compass Technology Development (300803.SZ). Risk Warning: Capital market fluctuations may bring volatility risks to investment returns; insurance liability may not meet expectations.