Zhongtai: Promoting long-term capital entering the market is conducive to improving the stability of the market's funding side.

Zhongtai issued a research report stating that the core measures of the policy for long-term funds entering the market include increasing the actual investment ratio, extending the assessment period, and implementing supporting measures. Currently, there is still a significant market space for long-term funds to enter, promoting the entry of long-term funds into the market is conducive to the stability of the market's fund side, gradually forming a positive feedback loop between funds and assets. Brokerage firms recommend focusing on CITIC SEC (600030.SH), CICC (601995.SH), China Galaxy (601881.SH), among other top brokerage firms; insurance companies are advised to focus on New China Life Insurance (601336.SH), China Life Insurance (601628.SH), China Pacific Insurance (601601.SH), and Ping An Insurance (601318.SH). The main points of Zhongtai are as follows: Core measures of the policy for long-term funds entering the market. 1. Increase the actual investment ratio: It is proposed that the A-share market value held by public funds should grow by at least 10% annually in the next three years; efforts should be made to ensure that large state-owned insurance companies allocate 30% of new premiums for investment in A-shares starting from 2025. The second batch of insurance funds for long-term stock investments should be implemented in the first half of 2025, with a scale of no less than 100 billion yuan. 2. Extend the assessment period: It is recommended that public funds, insurance funds, basic pension funds, and annuity funds should all be subject to assessments of three years or more, significantly reducing the weight of the annual operating targets for state-owned insurance companies, and specifying the assessment arrangement for the national social security fund for a period of five years or more. 3. Supporting measures: Optimize the capital market ecosystem, encourage listed companies to distribute dividends, repurchase shares, expand the participation of private placements, and promote index-based investments, among other measures. Current situation of long-term funds: There is still a significant market space for funds to enter. 1. Social security funds: As of the end of 2023, the total assets amounted to 3.01 trillion yuan, with holdings reaching 470 billion yuan by the third quarter of 2024, accounting for only 0.56% of the total A-share market value. 2. Pension funds: Basic old-age insurance funds: As of the end of 2023, the investment assets amounted to 1.86 trillion yuan, with equity products accumulating a return of 60.89% since their inception, but the net value accounted for only 4.79%. Corporate annuity: By the third quarter of 2024, the scale was 3.49 trillion yuan, a year-on-year increase of 12.95%; occupational annuity: By the end of 2023, the scale was 2.56 trillion yuan, a year-on-year increase of 21.33%. 4. Public funds: The total scale exceeded 32 trillion yuan by the end of 2024, with equity funds totaling 7.2 trillion yuan (accounting for 21.95%), and a growth rate of 14.27% in 2024. 5. Insurance funds: The proportion of equity investments in the third quarter of 2024 was 21.06% (with stock investments accounting for 7.51%), with a balance of fund utilization reaching 31.1 trillion yuan. Calculation of the scale of insurance funds entering the market: Considering that in practice, "new premiums" can be understood as the actual insurable funds of insurance companies after deducting claims and expenses, we use "total premium income - (insurance service fees + business and management expenses)" as the scale of new premiums. Taking five state-owned insurance companies as an example (expecting large state-owned insurance companies to be significant contributors to incremental funds), it is estimated that the new premiums in 2025 will be 1.12 trillion yuan, with 30% invested in A-shares bringing about an increase of approximately 335.3 billion yuan in funds. Investment recommendation: Promoting the entry of long-term funds into the market is conducive to the stability of the market's fund side and gradually forming a positive feedback loop between funds and assets. Brokerage firms recommend focusing on top brokerage firms such as CITIC, CICC, and Galaxy; insurance companies are advised to focus on New China Life, China Life, Taikang, and Ping An. Risk factors: Increased market volatility; economic downturn exceeding expectations; risks of delayed information updates in the research report; risks of deviations in industry scale calculations.