Core Viewpoint - The article emphasizes the implementation of long-term performance evaluation for state-owned commercial insurance companies, which is expected to enhance the stability of their long-term profitability and increase the space for insurance capital to enter the market, maintaining an "overweight" rating for the industry [1][4]. Group 1: Notification Overview - On July 11, the Ministry of Finance issued a notification aimed at guiding state-owned insurance companies towards long-term performance evaluation, thereby increasing the investment capacity of insurance funds [2]. - The notification builds on previous measures, such as the "Performance Evaluation Method for Commercial Insurance Companies" released in July 2022, which assessed financial indicators like capital preservation and net asset return rates [2]. Group 2: Long-term Evaluation Mechanism - The notification strengthens the long-term evaluation of operational efficiency indicators, adjusting the assessment of net asset return rates and capital preservation rates to include annual, three-year, and five-year indicators [3]. - The weight distribution for these indicators is set at 30% for the annual indicator, 50% for the three-year indicator, and 20% for the five-year indicator [3]. Group 3: Asset Management and Investment Guidance - State-owned commercial insurance companies are required to enhance asset-liability management, ensuring better alignment in terms of duration, cost-benefit, and cash flow [3]. - The notification encourages the identification of high-quality investment targets that offer stable returns and potential for appreciation, thereby supporting the long-term capital role of insurance funds in the economy [3]. Group 4: Impact on Profitability and Market Stability - By increasing the weight of long-term indicators and balancing short-term and long-term goals, the notification is expected to improve the profitability stability of state-owned insurance companies and enhance their willingness to invest in the market [4]. - The overall effect is anticipated to stabilize the supply of long-term capital in the capital market [4].

Regulatory Changes - The Ministry of Finance has issued a notification to guide insurance funds towards long-term stable investments, adjusting the weight of net asset return rate indicators to 30% for the annual indicator, 50% for the three-year indicator, and 20% for the five-year indicator [1][2] - The capital preservation and appreciation rate indicator has also been modified to include a similar weighting structure [1][2] Market Impact - The new regulations are expected to encourage insurance funds to focus more on long-term returns and increase investments in A-shares, thereby enhancing the role of long-term institutional investors and promoting high-quality development of the capital market [2] - As of the end of 2024, the balance of commercial insurance funds in China is projected to be approximately 33 trillion yuan, with only about 11% currently invested in A-shares, indicating significant room to reach the 25% policy cap [3] Entrepreneurial Board Developments - The Shenzhen Stock Exchange has revised the compilation plan for the ChiNext Composite Index, introducing a monthly delisting mechanism for stocks under risk warning, which is expected to improve sample stock quality and index investability [4] - The ChiNext Composite Index has seen a cumulative increase of 55% since the "924 market" last year, with a 10% rise this year, indicating its high yield and elasticity [4] A-share Market Dynamics - The A-share market experienced a high trading volume of 1.74 trillion yuan, the highest in three months, despite a pullback in major indices [6] - The decline in bank stocks is attributed to large funds actively cooling down the market, while brokerage stocks have surged, indicating a potential shift in market leadership [6][11] Fund Flow Trends - Recent trends show that brokerage stocks like Dongfang Caifu and Zhongyin Securities have attracted significant inflows, with Dongfang Caifu leading with a net inflow of 1.473 billion yuan this week [11]

Group 1 - The core viewpoint is that insurance capital is increasingly investing in companies with strong fundamentals, stable dividends, and consistent performance due to the influx of long-term funds into the market [1] - Insurance companies are actively utilizing private equity funds for investment, focusing on long-term investment strategies [1] - The sectors where insurance capital is newly entering as major shareholders in A-share companies during the first quarter of this year include banking, telecommunications, automotive, electronics, and pharmaceuticals [1]

Investment Rating - The industry investment rating is "Overweight" indicating a positive outlook for the non-bank financial sector over the next six months [5][37]. Core Insights - The non-bank financial index increased by 2.5% last week, outperforming the CSI 300 by 1.4 percentage points, with both brokerage and insurance indices showing synchronized growth [6][10]. - The recent revision of merger and acquisition regulations by the China Securities Regulatory Commission (CSRC) aims to enhance capital market activity and support the transformation of the real economy [6][35]. - The third batch of long-term investment trials for insurance funds has been launched, with a notable increase in equity asset allocation in Q1 2025 [6][35]. Market Review - The Shanghai Composite Index rose by 0.8%, while the Shenzhen Component Index increased by 0.5%, and the CSI 300 rose by 1.1% [10]. - The average daily trading volume for stock funds was 15,160 billion yuan, a decrease of 4.4% from the previous week [19]. Industry News - The CSRC has modified the "Major Asset Restructuring Management Measures," introducing mechanisms for phased payment of restructuring shares and simplifying review processes [35]. - The Supreme Court and CSRC jointly issued guidelines to enhance judicial support for high-quality capital market development [35]. Investment Recommendations - For brokerages, the report suggests focusing on M&A activities, high asset returns, and improving return on equity (ROE) as key investment themes [6]. - For insurance companies, attention is drawn to large comprehensive insurers with competitive advantages under the new regulatory framework [6].

Investment Rating - The report maintains a "Recommended" rating for the insurance sector, indicating an expected relative increase of over 15% compared to the benchmark index within the next 12 months [8]. Core Insights - The adjustment of the stock investment risk factor by 10% is expected to alleviate capital occupation for insurance companies, thereby encouraging increased equity allocation and enhancing investment yield flexibility [4][5]. - The total scale of long-term investment pilot programs for insurance funds has reached 222 billion yuan, with significant participation from leading insurance companies, which is anticipated to introduce more incremental funds into the market [5][9]. - The new accounting standards and long-cycle assessment improvements are designed to optimize asset allocation and enhance the return on assets for insurance companies, promoting a "patient capital" approach [6]. Summary by Sections Investment Risk Factor Adjustment - The stock investment risk factors for various categories have been reduced, with the new factors being 0.27 for CSI 300 stocks, 0.315 for other main board stocks, 0.405 for ChiNext, and 0.36 for STAR Market stocks [4][9]. Long-term Investment Pilot Programs - The pilot program for long-term insurance fund investments has expanded significantly, with the latest increase of 60 billion yuan announced on May 7, 2025, bringing the total to 222 billion yuan [5][9]. Investment Strategy Recommendations - Insurance companies are expected to focus on high dividend, high ROE, and counter-cyclical assets, with a gradual increase in allocations to the CSI A500 index components, benefiting from macroeconomic stabilization [5][6]. - The report suggests that leading insurance companies such as China Pacific Insurance, New China Life, Ping An Insurance, China Life, and China Property & Casualty are likely to benefit the most from these changes [6].