Specifically, Xishui shares and Xinhua insurance increased by 9.99%, while China Pacific Insurance, Ping An, Tianmao group and PICC all rose sharply, with an increase of more than 7%.
As for the rising logic of insurance stocks, most insiders believe that with the stability of the domestic epidemic situation, the insurance liability side gradually returns to normal, the interest rate at the investment side rises, and the equity market warms up, which is favorable for insurance stocks.
As for the growth of insurance stocks, a person in charge of the investment department of a medium-sized property insurance company told the associated press, the shareholding structure of Guoshou and PICC is relatively more stable, the actual liquidity is smaller, and the elasticity is relatively greater. In the future, if the market continues to improve, insurance stocks are also relatively more likely. If the upward momentum of the stock market is greater than that of the economic cycle in the future, the periodic performance of insurance stocks may be better than that of bank stocks.
Meanwhile, CICC, which lowered the target price of Ping An on March 6, also highly valued China Life Insurance and Xinhua insurance. It predicted that the key to the investment opportunities of domestic insurance stocks in the next six months would be the core valuation driven changes, which would have a real negative impact on the domestic insurance companies. In the future, the long-term interest rate of 5-10 years will decline rapidly and remain low for a long time. This scenario is very unlikely to happen.
Interest rate increase + equity market recovery + premium repair promote the rise of insurance stocks
Recently, the performance of insurance stocks seems to have gone up. PICC once had a limit on July 2; China Life Insurance also had a limit on July 3; as for Hong Kong stocks, Zhongan insurance reached a new high in nearly two years.
Secondly, the equity market has recovered. As the certainty of economic recovery in the second half of the year is enhanced, the market risk preference is improved, and the equity market rebounds. The Shanghai Composite Index rose by 13.38% on the 60th. Since this year, insurance companies have intensified the distribution of equity investment, reversed the Q1 decline in investment income, realized growth and realized interest margin.
At the same time, the life insurance premium from April to May is also gradually repairing, out of the pressure period of the epidemic situation. The life insurance business premiums from January to May increased by 5.1% year-on-year. Since the start of this year, the cumulative growth rate of Guoshou and Xinhua has continued to improve, with the cumulative growth rate from January to may increasing by 15% and 32% respectively on a year-on-year basis; while Pingan and Taibao are still in the exploration period of transformation and reform, the negative growth rate of marginal premium from January to may gradually narrowed, and the cumulative growth rate remained low. At the same time, the main sales products of listed insurance companies changed from savings to security, and NBV was also repaired.
A person in charge of the investment department of a medium-sized property insurance company also told the associated press, basically, with the stability of the epidemic situation, the debt side gradually returns to normal, the interest rate on the investment side goes up, and the stock market rises. These factors are marginal good for insurance, and insurance is a relatively low valuation variety, especially the rise of China life insurance stocks has been very small before.
An actuarial appraiser of a medium-sized life insurance company also pointed out that in the second half of the year, there will be sales of new serious illness products in life insurance, and the new business situation of Q1 will continue to improve. It is still optimistic to achieve the plan formulated last year.
At the same time, the person in charge of the investment department of the above-mentioned medium-sized property insurance companies said from the transaction level that the shareholding structure of Guoshou and PICC is relatively more stable, the actual liquidity is smaller, and the elasticity is relatively greater.
A non bank analyst of a securities firm said bluntly, Guoshou and Xinhua have higher investment leverage, while PICC is listed on the property insurance market with negative cost and more direct feedback on investment.
In addition, for the growth of insurance stocks, it frankly said, at present, the valuation of insurance stocks is still at a discount, and now it is only the repair period of insurance shares.
With the rise of insurance stocks, securities companies are also busy. A non bank analyst of securities companies told CFA reporters, todays market is so good, we are busy making phone calls.
CICC, which lowered the target price of China Ping An A shares on March 6 this year, recently issued a high-profile report saying that it was optimistic about China Life Insurance and Xinhua insurance, both of which were rated as outperforming the industry.
It specifically explained that China Life Insurance and Xinhua insurance were recommended to continue to be optimistic about undervalued and high dividends, with a target price of HK $23 and HK $38 respectively. At the same time, the bank reiterated its view on the growth prospects of friendly bond insurance. The stock price adjustment triggered by this years short-term challenges provided investors with the opportunity to buy, rating outperforming industry and target price of HK $95.
The bank said that the mainland bond interest rate has stabilized and rebounded, and the core variable of domestic insurance stock valuation has reversed. As long-term interest rates fell rapidly in the first quarter, concerns about low interest rates continued to depress the valuation of insurance stocks. The bank believes that the market has overestimated the actual impact of the downward interest rate on the fundamentals of mainland insurance companies: the real negative impact on domestic insurance companies is the rapid downward trend of long-term interest rate and its long-term (5-10 years) low level, and this scenario is very unlikely to happen; as the mainland economic activity returns to normal in the second quarter, the expected reversal of long-term interest rate low will be the driving force The core variable of dynamic insurance stock valuation repair.
On July 3, Xia Changsheng, a non bank analyst of Tianfeng securities, pointed out in his research report that the subsequent participation of insurance companies in treasury bond futures trading is expected to be gradually promoted, which will effectively hedge the reinvestment risk of fixed income assets and support the long-term investment yield level of insurance funds.
He believes that at present, the valuation of the insurance sector is at a historical low. As of July 2, 2020pev of Ping An, Guoshou, Taibao and Xinhua were 0.98, 0.79, 0.58 and 0.65 times respectively. We believe that there is a driving force for the valuation improvement of insurance assets. Based on the dimension of half a year, Xinhua insurance is the first to be promoted, and it is suggested to pay attention to AIA.
Source of this article: Chen Hequn, editor in charge of CFA_ NB12679