Core Viewpoint - The A-share market is currently experiencing a "tug-of-war" around the 4000-point level, with accelerated sector rotation and intensified capital competition as the year-end approaches and outlook for 2026 is considered [1] Market Overview - The Shanghai Composite Index is in a phase of consolidation, with a lack of strong catalysts leading to a relatively stable market momentum, characterized by oscillation and accumulation [1] - The internal market dynamics show a significant increase in the speed of style and sector rotation, with profit opportunities concentrating in specific sub-sectors [1] - A "wait-and-see" strategy is recommended to avoid risks associated with chasing trends [1] Mid-term Market Outlook - The core support logic for the market is becoming clearer, with similarities drawn to the market conditions of 2020-2021, driven by policy guidance, industrial upgrades, and capital resonance [1] - The market is currently in the early stages of a new policy-driven and industry trend-driven cycle [1] - The fourth quarter is expected to be more stable, with November entering an earnings vacuum period, while the "14th Five-Year Plan" provides new hotspots for the market [1] Strategic Outlook for 2026 - The performance of RMB-denominated equity assets is strategically favored for three reasons: 1. The rise of new economic drivers in China, such as advanced manufacturing and technological innovation, is expected to drive a re-evaluation of China's growth model by overseas capital [1] 2. A marginal easing of Sino-US relations is anticipated to enhance risk appetite [1] 3. Increasing certainty of global liquidity easing is expected to support the RMB and equity markets [1] - Incremental capital sources for the market in 2026 are likely to come from foreign investment and public funds, with a gradual appreciation of the RMB against the USD expected [1] Asset Allocation Strategy - A balanced asset allocation strategy is recommended for the fourth quarter, with an emphasis on defensive and recovery opportunities [2] - High-dividend sectors are highlighted as valuable alternatives to deposits and real estate in a low-interest-rate environment [2] - The mid-term focus remains on technology growth and advanced manufacturing, with an emphasis on domestic production processes and new productive forces [2] - Key sectors for investment include new energy, new materials, aerospace, and strategic emerging industries as outlined in the "14th Five-Year Plan" [2]

Group 1 - The report emphasizes a "barbell" asset allocation strategy to achieve stable returns across economic cycles, balancing low-risk assets with high-growth opportunities to mitigate uncertainty and volatility in the capital markets [3][40][46] - The macroeconomic environment is characterized by pressure on global fundamentals and uncertainty in economic policies, leading to increased market volatility [3][40] - The report highlights the importance of capturing growth and event-driven market opportunities while providing tail risk protection against uncertainties [3][40] Group 2 - The U.S. economy shows signs of slowing growth momentum, with weak consumer spending and a cooling job market, while the real estate demand is also weakening [2][24] - In China, the Hang Seng Index is experiencing structural market trends, with significant gains in the semiconductor and computer sectors, while the 10-year government bond yield has risen above 1.79% [12][40] - Japan's market is under pressure from trade deficits and a significant drop in exports, with July's export data showing a 2.6% year-on-year decline, the largest since February 2021 [13][40] Group 3 - The report notes that the U.S. Federal Reserve is signaling a potential interest rate cut, but uncertainties regarding inflation and employment may disrupt this timeline [14][40] - The report discusses the recent trade agreement between the U.S. and the EU, which includes tariff adjustments and commitments to purchase U.S. energy products and AI chips [23][40] - The report indicates that the European economy is showing signs of recovery, with PMI data suggesting a rebound in manufacturing and services [16][23]

Investment Rating - The report maintains a "Recommended" rating for the insurance industry, indicating a positive outlook for the sector [2][6]. Core Insights - The insurance industry experienced steady growth in fund utilization, with a net increase of over 1.6 trillion yuan in Q1 2025, bringing the total fund utilization balance to 34.93 trillion yuan, a 5.0% increase from the beginning of the year [5][6]. - The allocation of funds has shifted, with bonds and stocks reaching their highest proportions in recent years, highlighting a more pronounced "barbell" structure in investment strategy [6]. - The report notes a significant increase in equity investments, with insurance companies actively increasing their positions in the transportation sector and continuing to engage in shareholding activities primarily in the banking and public utility sectors [6][15]. Summary by Sections Fund Utilization - As of Q1 2025, the balance of funds utilized by insurance companies was 34.93 trillion yuan, with life insurance companies holding 31.38 trillion yuan (89.8% of the total) and property insurance companies holding 2.27 trillion yuan (6.7% of the total) [5][6]. - The bond allocation reached 16.97 trillion yuan, accounting for 50.4% of total investments, the highest level in recent years, driven by a strategic increase in long-term bond investments [6]. - The stock balance increased to 2.82 trillion yuan, representing 8.4% of total investments, also the highest level in recent years, with a net increase of 389.3 billion yuan in Q1 2025 [6]. Investment Strategy - The report emphasizes the importance of long-duration bonds and high-dividend stocks as key components for insurance companies' revenue stability [6]. - The investment strategy is diversifying, with a cautious increase in equity allocation expected, alongside a richer variety of investment products [6]. Sector Focus - The top sectors for insurance equity investments include banking (45.8%), transportation (10.8%), real estate (7.4%), telecommunications (6.9%), and public utilities (6.1%) [10][11]. - The report highlights a trend of insurance companies increasing their stakes in high-dividend stocks, which provide stable returns and lower risk, aligning with long-term strategic investment goals [6][15]. Stock Recommendations - The report recommends specific stocks such as China Taiping and China Ping An, while suggesting to pay attention to New China Life, China Pacific Insurance, and China Life Insurance for their long-term investment value [6].

Core Viewpoint - Insurance capital is focusing on high dividend and technology growth sectors, with a total of 7,677 research activities conducted on A-share listed companies as of May 21 this year, indicating a strategic shift towards stable cash flow and growth potential [1][2]. Group 1: Research Activities - A total of 180 insurance institutions conducted 7,677 research activities on 1,292 A-share listed companies, showing a decrease in frequency compared to the same period last year [2]. - Among insurance asset management institutions, Taikang Asset Management and Huatai Asset Management led with 428 and 317 research activities, respectively [2]. - Pension insurance companies were the most active in research, with the top five being Ping An Pension Insurance, Changjiang Pension Insurance, China Life Pension Insurance, Taiping Pension Insurance, and China People's Pension Insurance [2]. Group 2: Reasons for Decrease in Research Frequency - The decline in research frequency is attributed to three main factors: focus on high dividend stocks in a low-interest environment, more precise investment strategies due to regulatory clarity, and established market consensus on certain technology growth sectors [3]. - Despite the decrease in research frequency, the allocation of stocks by insurance companies has increased, with the proportion of funds allocated to stocks rising to 7.56% for property insurance companies and 8.43% for life insurance companies, up by 1.2 and 1.65 percentage points year-on-year, respectively [3]. Group 3: Investment Focus - The primary focus of insurance capital research includes high dividend sectors and technology growth sectors, such as electronic components, industrial machinery, electrical components and equipment, integrated circuits, medical equipment, and regional banks [4]. - Over 500 of the researched companies are listed on the Sci-Tech Innovation Board or the Growth Enterprise Market, accounting for nearly 40% of the total [4]. - The core characteristics of the sectors being focused on are the stable cash flow from high dividend assets and the growth potential of high-tech assets, which are supported by government policies [4]. Group 4: Future Outlook - Insurance capital is expected to continue optimizing a "barbell" asset allocation strategy, balancing high dividend assets for stable returns with investments in technology innovation, green low-carbon initiatives, and health care sectors [5]. - The use of innovative tools such as long-term equity investments and REITs will be emphasized to enhance portfolio structure while strengthening ESG risk management [5]. - The industry is encouraged to maintain a long-term investment philosophy and actively seek sustainable investment opportunities [5].