Chinese insurance funds continued to aggressively purchase banks’ H-shares this year. Ping An Life Insurance of China purchased 6.0775 million shares of China Merchants Bank’s H-shares (03968.HK) on March 13, raising its stake to 10.06%, according to information from the Hong Kong Stock Exchange.
Ping An previously crossed the 5% disclosure threshold for China Merchants Bank H-shares on January 10, just over two months prior to the latest stake increase. Between January 10 and March 13, China Merchants Bank’s H-shares surged 26.63%, from HK$38.3 to HK$48.5. Based on the prices, Ping An’s total investment exceeded HK$10 billion.
In addition to China Merchants Bank, Ping An currently holds stakes in other Hong Kong-listed banks, including 17.11% in Industrial and Commercial Bank of China (ICBC), 8.01% in Agricultural Bank of China, and 8.10% in Postal Savings Bank of China.
Apart from its 15% stake in ICBC acquired in 2024, most of its additional purchases occurred in 2025. In addition, Ping An also holds a 5% stake in China Construction Bank’s H-shares.
Ping An is not the only insurer increasing bank holdings. On March 12, another insurer Rui Insurance also increased its holdings of China CITIC Bank’s H-shares, reaching the disclosure threshold.
According to data from the Insurance Association of China, insurance funds have triggered disclosure thresholds 10 times so far in 2025, with six of these transactions involving bank stocks. These include Ping An’s purchases of Postal Savings Bank’s H-shares and China Merchants Bank’s H-shares (twice), as well as Agricultural Bank’s H-shares; New China Life’s purchase of Hangzhou Bank’s shares; and Rui Insurance’s purchase of China CITIC Bank H-shares.
Analysts say that insurance funds’ strong preference for bank stocks is mainly due to the high dividend yields. The banking sector outperformed in 2024, rising more than 34% for the year, leading all 31 industry sectors in the CSI classification. In January 2024, Great Wall Life increased its stake in Wuxi Bank (600908.SH) to 5%, marking the first time in over seven years that an insurance fund had crossed the disclosure threshold for an A-share bank.
A bond fund manager at a Shanghai-based mutual fund said that in 2024, insurance funds were seen increasing their allocations to bank stocks, mainly driven by their high dividend appeal. “Most investors recognize the logic behind trading dividend stocks. In a long-term low-interest-rate environment, these assets provide stable returns and cash flow.”
Guosen Securities said in a previous note that the surge in bank stocks in 2024 was mainly driven by the expansion of insurance funds and low-risk preference funds such as CSI 300 ETFs.
As risk-free interest rates continued to decline and household risk appetite weakened, insurance premium income saw solid growth since 2023, becoming a major source of incremental capital in the market, and large banks, with their stable and high dividends, have long been favored by insurance funds, it said.
According to data from Wind Information, as of December 31, 2024, the dividend yields of Minsheng Bank (600016.SH), Ping An Bank (000001.SZ), and Xiamen Bank (601187.SH) were 8.38%, 8.25%, and 8.16%, respectively, leading A-share listed banks. The six largest banks had A-share dividend yields ranging from 6.48% to 7.20%.
Since H-share prices are generally lower than their A-share counterparts, their dividend yields tend to be even higher under the same dividend payout conditions. The dividend yields of Chongqing Rural Commercial Bank, Minsheng Bank, and China Construction Bank H-shares exceeded or were equal to 10.0%. Among the other five major banks, Bank of China, Postal Savings Bank, Bank of Communications, and Industrial and Commercial Bank of China had H-share dividend yields between 9.42% and 9.82%, while Agricultural Bank of China’s yield stood at 8.56%.
Moreover, with the adoption of new accounting standards, insurance companies are increasingly inclined to hold high-dividend assets, as these can effectively enhance net investment returns while smoothing out the impact of equity asset fluctuations on profits.