Zhongtai Securities: The rebalance of insurance funding is expected to continue in August, and the sector is expected to continue contributing to relative and absolute earnings in July

The Zhitong Finance App learned that since late June, Zhongtai Securities released a research report saying that since late June, the sector as a whole has shown an upward trend at the bottom center. Against the backdrop of heightened market turmoil, the financial sector has been given the core function of stabilizing the market. Funding chips have changed from suppression to backstopping. I am optimistic that the sector will continue to interpret the “first to compete, then to be absolute” trend. Currently, insurance stock valuations are highly attractive, and the continued divergence between fundamentals and stock prices is expected to be strongly repaired. The bank believes that the sector's broad logical framework of “looking at financial pressure relief in the short term, boosting value and profit growth in the medium term, “moving deposits & slow bulls” boosting value and profit growth, and looking ahead in the long term, to clear out hidden concerns about interest spreads and losses has not changed. The relocation of debt-side deposits and continued slow growth on the asset side are the long-term logical foundations of the insurance sector.

The main views of Zhongtai Securities are as follows:

The year-to-date TII for insurance capital is 3.77%, which is 26.19% (upper middle level) of the historical quartile for the past ten years (since 2016)

According to estimates, the current period (July 2026) insurance simulated new money yield was 2.58% (2.61% in the previous period, 2.63% in the same period last year); the simulated net return on investment in the current period was 3.18% (3.23% in the previous period, 3.44% in the same period last year); the simulated annualized total return on investment in the current period was 3.77% (4.97% in the previous period, 4.83% in the same period last year). The reason the total return on investment was higher than the return on net investment in the current period due to the trading price spread of trading financial assets in the current period - the non-annualized period reached 3.68% (9.68% in the previous period) 77%, compared to 9.27 in the same period last year %).

Fixed income asset yield tracking

The shortage of high-quality assets continues, and the level of yield to maturity leveled off. According to the bank's estimates, the average NMII of current bonds is 1.86%, and the stock NII is 2.74%; after adjustment, the average yield on new deposits is 1.62%, and the stock yield is 2.41%; according to data from the Utilization Trust Network, the average expected annualized yield of non-standard asset management trusts is 4.74%. Since June, insurance has replenished bonds, bought a large number of 30-year interest bonds (mainly local bonds), and continued until July. Judging from the increase in the allocation of various term securities since 2026, local bonds 20-30Y, interest rate bonds 20-30Y, 9M-1Y deposit notes, 15-20Y interest rate bonds, and 15-20Y local bonds are the top five in total allocation increases.

Equity asset yield tracking

A-shares fell unilaterally, the index stabilized at the end of the month, market differentiation intensified, double innovation led the dividend defense stabilized, and profit recovery did not change the level of yield accumulated since the beginning of the year. According to the bank's estimates, the return on insurance equity investment from the beginning of 2026 to the end of July was 2.5% (10.0% for the same period in 2025). The Shanghai, Shenzhen and Hong Kong weighted dividend ratio is expected to be 2.90% for the current period. According to ifind statistics, the 2Q26 Shanghai and Shenzhen 300 weighted average ROE (TTM) was about 9.32% (previous value was 9.24%). The current insurance capital is concentrated on rail and train equipment, securities, and brokerage, as the main shareholder's increase in Hong Kong stock tradable shares. The Ping An Department did not show a license in this issue. China Post Life increased its holdings of China Pass twice in this issue, making it easy for Sunshine Insurance to reduce its holdings. The top ten stocks with the highest frequency of insurance research in this issue are Xinyisheng, Yuanjie Technology, Zhongji Xuchuang, Tianci Materials, Lanqi Technology, Guangliwei, Shunluo Electronics, Hikvision, Sanfu Xinke, and Huaqin Technology.

Risk warning: The calculation results are constrained by the availability of data and the rationality of assumptions, and there is a risk of bias; macroeconomic recovery falls short of expectations, long-term interest rates fall rapidly and sharply; equity market fluctuations have intensified.