HK Stock Market Move | Chinese-funded securities firms' stocks have increased, with the possibility of expanding the gains. Insurance funds are expected to continue to provide incremental support for the equity market. Loosening restrictions on high-quality institutions will help repair valuations.

Chinese-funded securities firms saw their stock prices increase further. As of the time of writing, China Galaxy (06881) rose by 5.17%, reaching HK$10.57; Guotai Haitong (02611) rose by 4.61%, reaching HK$16.78; CITIC SEC (06030) rose by 3.21%, reaching HK$27.64; GF SEC (01776) rose by 2.58%, reaching HK$17.49. On the news front, the Financial Regulatory Committee issued a notice adjusting the risk factors related to insurance companies' business. Guotai Haitong pointed out that the China Banking and Insurance Regulatory Commission has lowered the risk factors for long-term holdings of the Shanghai and Shenzhen 300, the low volatility constituents of the CSI Red Dividend Index, and some science and technology innovation board stocks, aiming to reduce the capital occupation of quality equity assets by risk funds without relaxing solvency constraints, and strengthen the guidance of "enjoying capital benefits by long-term holding". Although the minimum capital size released this time is limited, the direction is clear and beneficial for insurance funds to moderately increase their equity allocation and extend their holding period. Coupled with the long-term logic of "approximately 30% of new premiums entering the market," we still see insurance funds continuously providing incremental support to the equity market in the coming years. It is worth noting that the Chairman of the China Securities Regulatory Commission, Wu Qing, stated a policy of appropriately "loosening" restrictions on high-quality institutions to further optimize risk control indicators, moderately open up capital space and leverage restrictions, and enhance capital utilization efficiency. An analysis by Haitong research report pointed out that the core of Chairman Wu Qing's policy of "loosening" restrictions on high-quality institutions is to promote the securities industry's business logic from size-oriented to risk pricing capability, and from relying on license dividends to enhancing professional management levels. This shift will significantly benefit top-tier brokerage firms and become an important catalyst for sector valuation recovery.