Guotai Haitong: Insurance and securities companies all received increased allocations, optimistic about the non-bank opportunities following the influx of residential funds into the market.

Guotai Haitong released a research report by the Non-Bank team stating that the brokerage sector received increased allocations, with the holding ratio of public mutual funds (excluding passive index funds) increasing from 0.85% to 1.08%, leaving the sector under-allocated by 2.30%. The allocation ratio for the insurance sector increased from 1.03% to 2.13%, under-allocated by 0.33%, with the insurance index rising by 23.42% in the fourth quarter. Although the holdings in the non-bank sector increased in the fourth quarter, they still remain under-allocated by 3.08% overall. Guotai Haitong is optimistic about the opportunities brought by residents' funds entering the market under a relatively low interest rate environment, leading to improved profitability and opportunities for undervalued non-bank stocks. The main points of Guotai Haitong are as follows: 1. The market's rise in the fourth quarter led institutions to increase allocations to the brokerage sector. The holding ratio of public mutual funds (excluding passive index funds) increased from 0.85% to 1.08%, with the sector still under-allocated by 2.30%. As the trading volume in the stock-based mutual funds remained high, the active trading in the market drove funds to increase their allocations to the brokerage sector. 2. The allocation ratio for the insurance sector increased significantly, highlighting the opportunities brought by allocation strength. The allocation ratio for the insurance sector increased from 1.03% to 2.13%, with an under-allocation of 0.33%, and the insurance index rose by 23.42% in the fourth quarter. 3. The allocation ratio for the diversified financial and financial technology sectors decreased in the fourth quarter. However, certain financial technology-related targets are worth watching. Investment recommendations from Guotai Haitong include long-term investors accelerating market entry, focusing on four investment opportunities: 1. Opportunities in financial technology and brokerage sectors brought by residents' funds entering the market for wealth management. 2. Valuation repair opportunities in the insurance sector brought by interest rate stabilization in early 2026. 3. Profit enhancement opportunities for third-party payment companies brought by DIGIHUMAN RMB scenario expansion. 4. Opportunities for investment institutions to exit through the increase in IPOs of science and technology companies. Risk warnings include significant fluctuations in the equity markets and unexpected shifts in residents' allocation of equity assets, as well as concerns about the slow alleviation of life insurance interest spread losses.