This entry of medium- and long-term funds into the market is referred to as "exceeding expectations" in terms of scale! What mysteries will be revealed at the 9 a.m. press conference today?

Six departments jointly issued the "Implementation Plan for Promoting the Entry of Medium and Long-Term Funds into the Market". A senior expert evaluated, "The specifications for promoting medium and long-term funds to enter the market exceed expectations." The evaluation of "exceeding expectations" is based on several factors: firstly, the top-level promotion and the joint release by six ministries; secondly, the clarity on five categories of medium and long-term funds, including commercial insurance funds, national social security funds, basic pension insurance funds, enterprise pension funds, and public funds, will increase their entry into the market; thirdly, the combination of various guiding measures, assessment changes, and optimizing the environment will further facilitate the entry of medium and long-term funds into the market; fourthly, in terms of the incremental funds brought in, a securities research team predicted that an increase of only 1 percentage point in four categories of medium and long-term funds could bring in over 400 billion in incremental funds, clearly indicating that this is a conservative estimate based on the lowest percentage point. The specific measures and regulations for the entry of medium and long-term funds into the market will also be announced in a timely manner. According to the latest notification, the State Council Information Office will hold a press conference at 9:00 am on January 23, 2025 (tomorrow), where the Chairman of the China Securities Regulatory Commission Wu Qing, Deputy Minister of Finance Liao Mian, Deputy Minister of Human Resources and Social Security Li Zhong, Communist Party Committee member of the People's Bank of China Zou Lan, and Deputy Director of the China Banking and Insurance Regulatory Commission Xiao Yuanqi will introduce the efforts to promote the entry of medium and long-term funds into the market and promote the high-quality development of the capital market, and answer questions from reporters. Following this, the Social Security Fund Council stated that it would actively leverage long-term funds and patient capital to help stabilize the operation of the capital market. According to the calculations of securities analysts, if insurance funds, social security funds, basic pension funds, and enterprise pension funds each increase their stock allocation by 1%, the corresponding incremental funds could exceed 430 billion. From an allocation perspective, securities firms believe that value-based enterprises with mature business models, stable governance systems, and stable dividend cash flows will continue to be favored by medium and long-term funds. Each of the four types of medium and long-term funds increasing by just 1% can bring in over 400 billion in incremental funds According to securities analysts, this implementation plan inherits the ideas from the "Guiding Opinions" issued on September 26, 2024, and further clarifies specific measures to promote the investment of insurance funds and pension funds in the stock market. Policy guidance to increase the investment of medium and long-term funds in stocks is consistent with the "stabilize the stock market" stance put forward in previous political meetings, which is positive for the equity market. In addition, there are clear instructions for large insurance companies to increase their allocation of equity assets, extend the assessment period for insurance funds, directly addressing key issues and difficulties, thereby improving the resilience of insurance companies to stock market fluctuations. The plan mainly guides insurance funds, social security funds, pension funds, and pension funds to enter the market through medium and long-term assessments. Analysts have conducted calculations immediately after the plan was implemented: If insurance funds increase their equity allocation by 1%, it corresponds to approximately 321.5 billion in incremental funds. As of the third quarter of 2024, the total investment balance of insurance companies was 31.15 trillion, with the stock investments of life insurance and property insurance companies accounting for 7.5%, funds 5.7%, and long stock investments 7.8%, totaling about 21%. The comprehensive solvency ratio of the insurance industry is 197.4%, corresponding to a maximum equity allocation of 25%. Considering that funds include debt-based and currency-based products, there is still some room for insurance funds to increase their equity allocation. Taking into account the statistics of funds and other equity financial products, as well as the differentiation of solvency levels within the industry, top-tier insurance companies are basically at the 30% limit for equity allocation, with each 1% increase corresponding to about 321.5 billion in incremental funds, if calculated at 23.5%-24%, it corresponds to about 785.4 billion-946.1 billion in equity asset allocation space. If social security funds increase their stock allocation by 1%, it corresponds to approximately 301 billion in incremental funds. As of the end of 2023, the total social security fund assets were 3.01 trillion, and according to the "National Social Security Fund Domestic Investment Management Measures (Consultation Draft)", the maximum investment ratio for investing in stock assets by social security funds is 40%. Currently, the stock investment of social security funds is significantly lower than the maximum proposed ratio in the consultation draft. A 1% increase in stock allocation would correspond to approximately 301 billion in incremental funds. As of the third quarter of 2024, based on the stock holdings calculated according to social security funds, the total stock market value reached 459.9 billion, accounting for approximately 15.3% of the total assets at the end of 2023. If basic pension funds increase their equity allocation by 1%, it corresponds to approximately 18.6 billion in incremental funds (or approximately 78.2 billion based on investment operations), and the bottleneck for entry into the market lies in increasing entrusted investment scale. As of the end of 2023, the cumulative balance of basic pension insurance funds was 78.173 trillion, with the investment operation scale being 1.86 trillion. According to the "Basic Old-Age Insurance Fund Investment Management Measures" issued by the State Council, the total of equity products and other equity products in basic old-age insurance funds shall not exceed 30% of the net asset value. As of the third quarter of 2024, the total stock holdings of basic old-age pension funds amounted to approximately 33 billion, accounting for less than 2% of the total fund investment scale at the end of 2023. At the same time, the nearly 6 trillion pension fund balance is mainly invested in bank deposits and national bonds, limiting the ability to unleash the long-term advantages of pension funds. If the total pension funds increase their equity allocation by 1%, approximately 60.8 billion in incremental funds. As of the third quarter of 2024, the accumulated scale of enterprise annuity funds reached 3.52 trillion; as of the end of 2023, the investment operation scale of occupational annuity funds reached 2.56 trillion. From the perspective of portfolio allocation, as of the third quarter of 2024, enterprise annuity funds had a total of 1,214 fixed-income portfolios and 4,022 equity portfolios, with asset proportions of 13.2% and 86.8% respectively. Although the proportion of equity portfolios is much higher than fixed-income portfolios, the specific equity allocation remains relatively stable and safe overall. The plan mentions speeding up the issuance of guidance on performance assessments for enterprise (occupational) annuity funds lasting more than three years, which may help promote the pace of pension fund entry into the market. The above-mentioned securities analysis team also pointed out that the results of the current calculations are conservative estimates based on current data, and in the long run, incremental funds could reach a higher scale. According to research by Founder Non-Banking Financials, if the utilization of insurance funds' balance grows by a compound rate of 8%-10% over the next three years, it will lead to...If the proportion of stocks and funds increases to 13%-15%, the balance of insurance funds invested in stocks and funds by 2027E will reach 5.32-6.49 trillion yuan, with an annual average increase of approximately 0.39-0.78 trillion yuan.The proportion of medium and long-term funds holding A-shares has been continuously increasing. In fact, in the past few years, under regulatory guidance, the pace of medium and long-term funds entering the market has accelerated. Insurance funds are an important force in medium and long-term funds. The plan also mentioned accelerating the promotion of the second batch of insurance funds' long-term stock investment pilot projects, gradually expanding the range of participating institutions and the scale of funds, further expanding the scale of convenient operations for securities funds and insurance companies, and other measures. Actively supporting insurance funds to carry out long-term stock investment pilots, China Life Insurance, New China Life Insurance as the initial pilot institutions, plan to jointly invest 50 billion yuan, focusing on investing in high-quality listed companies in the secondary market. Currently, this project is entering the implementation phase. With the continuous entry of insurance funds into the market, previous data shows a significant increase in the proportion of insurance funds' OCI items in stocks. According to a Haitong research report, as of the mid-2024 interim report, the proportion of China Life Insurance, Ping An Insurance, China Pacific Insurance, New China Life Insurance, and China National Insurance's stock assets in the FVOCI item increased by +4.3pct, +4.6pct, +6.4pct, +7.0pct, +5.3pct to 7.7%, 57.8%, 20.8%, 12.5%, and 40.5% respectively from the beginning of the year. Looking ahead, with the guidance of the plan's supporting policies and long-term cycle assessments, the proportion of insurance funds investing in equity assets is expected to further increase, bringing more patient capital to the A-share market. In addition, in terms of convenient operations, two phases have already been implemented, with the first phase and second phase sizes being 50 billion yuan and 55 billion yuan respectively. After the implementation of this plan, it is expected that the scale will continue to increase in the future. The social security fund has always maintained a stable position, as evidenced by the data for the third quarter of 2024, where the social security fund appeared among the top ten shareholders/shareholders of 563 companies. Since the end of 2023, including Central Huijin, Central Huijin Asset Management, Guoxin Capital and other "national team" have successively entered the four major banks and broad-based ETFs, supporting the A-share market. As per the mid-2024 interim report, by the end of the second quarter of 2024, the national team including Central Huijin Investment and Central Huijin Asset Management held a total market value of stock ETFs of 583.866 billion yuan, compared to only 117.695 billion yuan at the end of last year. The national team's holding of ETFs increased significantly by 466.17 billion yuan in six months, nearly quadrupling. The national team continued to increase holdings in the third quarter of 2024, with Central Huijin Asset Management becoming the main buyer. Comparing the data, Central Huijin Asset Management increased holdings of 25.893 billion shares of Huatai Bairui CSI 300 ETF, 38.637 billion shares of Yifangda CSI 300 ETF, 11.474 billion shares of Huaxia CSI 300 ETF, and 9.484 billion shares of Jiashi CSI 300 ETF. According to the net asset value calculations, Central Huijin Asset Management holds about 27.3077 billion yuan in size for the four CSI 300 ETFs. In addition to the CSI 300 ETFs, the national team's holdings also cover the CSI 500 ETF, the ChiNext Board ETF, the CSI 1000 ETF, and other ETFs, to maintain stability in the capital market. It is worth noting that there are rumors that the national team buys at the low point and sells at the high point to make a profit. The disclosure of the fourth quarter report in 2024 can reveal the truth. Among the broad-based ETFs represented by the CSI 300 ETF, ChiNext ETF, CSI 1000 ETF, and Sci-Tech Innovation Board ETF, the national team did not show any trends of selling or buying.