Core Viewpoint - The entry of long-term capital, primarily from insurance funds, into the stock market is accelerating, which is beneficial for market stability. Starting from 2024, insurance funds have increased their investment in bank stocks, leading to a significant rise in the bank stock index, which has outperformed the overall market indices [1][3]. Investment Trends - Insurance funds have concentrated their investments in bank stocks since 2023, a trend linked to changes in accounting standards for the insurance industry. The new accounting standards, effective from January 2024, allow insurance companies to account for bank stocks under the equity method if certain conditions are met, potentially leading to substantial profits [1][2]. Accounting Standards - The new international accounting standards for the insurance industry stipulate that long-term equity investments can be accounted for under the equity method if the investor has "control," "joint control," or "significant influence." In China, the threshold for "control" is lowered to a 5% holding with a board seat, compared to the international standard of 20% [2]. Market Dynamics - The persistent undervaluation of bank stocks, with prices often below net asset value, is attributed to operational challenges in the banking sector. The net interest margin has decreased significantly, raising concerns about the sustainability of bank profitability [3]. Regulatory Framework - In July 2015, regulations were introduced to allow insurance funds to invest more in blue-chip stocks, with specific conditions regarding solvency ratios and investment limits. These regulations aim to stabilize the capital market while preventing excessive capital expansion [4]. Risk Management Suggestions - It is recommended that insurance funds adhere to principles of prudent and diversified investment, limiting exposure to any single industry to 10% of total stock investments. Additionally, the criteria for determining "control" or "significant influence" should be carefully analyzed, considering the unique characteristics of China's banking sector [5].