Soochow: Capital market main battleground, securities firms fully participate in pension financial construction.

Soochow released a research report stating that securities companies have unique advantages in supporting the construction of the pension finance sector. Firstly, securities companies and their public funds have a well-established investment research system and high-quality research teams, giving them advantages in product design. Secondly, securities companies have strong advisory teams and as distributors of financial products, they can provide more comprehensive wealth management services to individual pension participants. Lastly, securities companies, as direct participants in the capital market, can provide rich capital market services to companies in the pension industry to meet their funding needs. The silver-haired era has arrived, and securities companies have a lot to offer from groundwork to investment education. The main points of Soochow are as follows: First and second pillar pension fund investment: securities companies mainly rely on their controlling stake in public funds for participation. 1) The social security fund foundation adopts a combination of direct investment and entrusted investment for investment operations. By the end of 2022, the proportion of direct investment and entrusted investment in the net assets of the basic pension insurance fund entrusted by the social security fund foundation was 38.92% and 61.08%, respectively. Among the 21 securities investment management institutions for basic pension insurance funds, including 14 fund companies, 3 insurance asset management companies, 3 pension insurances, and 1 securities company. Among the 14 fund companies, 12 are securities companies' shareholding or controlling companies. 2) The entities of enterprise annuity mainly invest through entrusted investment managers, with securities companies' participation exceeding three-tenths. In 2018, the market-oriented operation of enterprise annuity started, with 11 out of 22 investment managers being public fund companies, of which 8 are securities companies' shareholding or controlling companies. Securities companies such as CICC and CITIC SEC were selected as pension entrusted investment management institutions. By the end of the third quarter of 2024, securities companies directly or indirectly participating through shareholding fund companies had a scale of 1.2 trillion yuan, accounting for 34.2% of the total scale. Wealth management: Providing professional pension allocation services to meet the retirement needs of the people During a press conference, the Ministry of Human Resources and Social Security mentioned that the individual pension system being implemented in 36 cities and regions is currently running smoothly, with positive results from the pilot program. The next step will be to advance full implementation. Among the 51 institutions included in the China Securities Regulatory Commission's "List of Individual Pension Fund Sales Institutions," 24 are securities companies, more than the 19 banks and 8 independent fund sales institutions. The primary clients of securities companies are mainly converted from stock trading clients, with limited inflow channels, weaker offline channels compared to banks, and weaker online channels compared to third parties. However, these clients have a higher risk preference and some experience in equity asset investment. Securities companies' investment advisory services can be synchronized through Wuxi Online Offline Communication Information Technology Co., Ltd. by providing a full lifecycle of advisory services to encourage clients to purchase individual pension fund products and enhance customer loyalty. Target retirement funds: Public funds are the main battlefield for participating in pension finance Target retirement fund products have a clear positioning, aiming to achieve long-term stable value appreciation of retirement assets, suitable for long-term holding by investors, adopting mature asset allocation strategies, and reasonably controlling portfolio volatility risk. The individual pension system has included target retirement funds in the pension finance sector, providing valuable development opportunities. According to the "List of Individual Pension Fund Names" released by the Ministry of Human Resources and Social Security, 199 out of 284 individual pension funds are target retirement funds, and 85 are newly included equity index funds. From 2018 to 2021, the scale of target retirement funds rapidly grew from 4.1 billion to 113.2 billion, but after 2021, influenced by the capital market, fund performance was generally under pressure, with the scale of target retirement funds dropping to 70.6 billion by the end of 2023, a 38% decrease from 2021. Industrial finance: Integrated investment and financing, huge future potential 1) Despite the multiple opportunities that the elderly care industry currently faces, such as policy, demand, and economic transformation opportunities, there are still bottlenecks in industrial investment and enterprise financing, and securities companies' involvement in industrial finance for the elderly care industry is still significantly inadequate. Currently, there are a limited number of fund products in the Chinese market dedicated to the elderly care industry, with fewer than 10 public fund products and a total size not exceeding 10 billion yuan. Additionally, in recent years, there have been few first-time listings and less financing through secondary offerings for elderly care-related companies. 2) It is imperative for financial institutions to collectively support the development of industrial finance in the elderly care industry to build a sound elderly care industry system and promote the healthy development of the silver-haired economy. Securities companies have more room to play a bigger role in industrial investment and enterprise financing, such as focusing on investment opportunities in the elderly care industry and establishing special thematic fund products. They can also provide high-quality research services to enhance market attention to quality investment opportunities in the elderly care industry. Continuously expanding the investment banking business in the elderly care industry, discovering and supporting companies with core competitiveness and growth potential by providing guidance and support for them to go public to meet their financing needs. Actively exploring and launching targeted financing services to broaden effective financing channels and optimize enterprise financing structures. Risk warning: 1) Policy progress falls short of expectations; 2) Significant decline in equity markets.