On a bright morning, anticipation filled the air as the State Council Information Office of China held a significant press conferenceMarket analysts and investors tuned in eagerly, hoping for decisive signals to direct their investment strategiesFrom the moment the meeting commenced, it became clear that this press conference was not just another routine update but a potential catalyst for major market movement.

By the time the trading day began, major indices opened on a bullish note, with many stocks experiencing notable gainsIn fact, just within the first half of the day, the trading volume skyrocketed to a staggering 919.3 billion yuan, showing a significant increase of 177.9 billion yuan from the previous dayA remarkable over 4,400 stocks saw their prices rise during this time, a clear indication of the market's optimistic response to the announcements made during the press conference.

Traders left the opening bell confident in a strong upward trend; however, come afternoon, a more nuanced market dynamic emergedWhile certain sectors held on to their gains throughout the day, others experienced a retreat from their early highsThis development underscored the uneven distribution of benefits across various sectors driven by the press conference's revelations.

Naturally, investors became curious about which sectors and stocks would be the real beneficiaries of the proposed long-term investment plans that were highlightedThe conference had made it clear that the domestic investment landscape would see transformative changes, particularly with large-scale investments expected from state-owned insurance companies to support the equities market.

01

Investment Scale: Understanding the Numbers

Several key points about the funding were emphasized by the conference speakers:

Beginning from 2025, large state-owned insurance companies will be directed to increase their investments in A-shares by allocating 30% of their annually added premiums to this asset class.

Over the next three years, public funds are expected to increase their holdings in A-share circulating market value by at least 10% each year.

Furthermore, an investment pilot program focusing on long-term equity investment is set to roll out by the first half of 2025, with a minimum target capital pool of 100 billion yuan.

This leads to the question: how much capital is actually at stake?

According to analyses provided by financial institutions like Founder Securities, the projections were optimistic:

Assuming premium growth rates between 0% and 10% and A-share investment ratios between 15% to 30%, it’s estimated that the annual premium scale of large listed insurance firms could approach 2.5 trillion yuan, leading to an incremental capital flow between 370 billion yuan and 830 billion yuan

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Meanwhile, the single premium scale could be close to 600 billion yuan, equating to an incremental capital from new policies ranging from 100 billion yuan to 220 billion yuan.

If these estimates are correct, it would mean significant capital influxesWhile actual figures may vary, there will surely be further disclosures in the months following that can clarify these expectations.

Additionally, supportive measures were detailed in the implementation plan, highlighting comprehensive performance evaluations for state-owned insurance firms over three years, with an emphasis on net asset yield that prioritizes long-term results.

This approach aims to combat the short-termism that has plagued these companies, facilitating a shift towards a more sustainable investment strategy.

A notable investor “dividend” raised during the discussion was the encouragement for publicly listed companies to reward investors during traditional holiday seasons, which may lead to significant savings—approximately 45 billion yuan—on fund costs for investors in 2025.

Though much of this may seem familiar, echoing last year’s post-conference plans, the scale of funding and the specifics surrounding implementation reveal genuine commitment from regulators.

The sheer magnitude of this incremental capital promising to enter the market undoubtedly signals a positive shift for the stock market.

02

Identifying Beneficiaries: Which Stocks Stand to Gain?

As market performance so vividly demonstrated, the day itself offered initial insights into which sectors might thrive under the new investment landscape.

Throughout the trading day, the Shanghai Composite Index confirmed its upward trajectory, illustrating the appetite for the fundamental blue-chip, white-horse stocks that form the bedrock of stability in the market.

Companies harboring stocks favored by insurance funds, social security, and pension investments showed an unmistakable correlation with the early market gains

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This is not a trivial observation; it reflects a broader institutional trend recognized by vigilant analysts.

For instance, insurance firms predominantly prefer large-cap, blue-chip stocksAccording to the third-quarter reports of 2024, banks dominated the top ten holdings of insurer stocks.

Seven of these positions are occupied by banks, including key players like Shanghai Pudong Development Bank and China Merchants BankFurthermore, the telecommunications and transport sectors also attract significant attention from insurers, as evidenced by holdings in firms such as China Unicom and China Telecom.

Moreover, technology-driven sectors are visibly favored as well, with high-tech industries like electronics and biomedical among the top-performing conglomerates within insurers' portfolios.

The analysis extends to pension funds, which have invested significantly in over 180 stocks, with substantial stakes exceeding 1 billion yuan in 103 of those stocksTheir preference is evident in blue-chip companies with healthy dividend yields.

Social security funds have similarly concentrated their holdings on a select number of companies such as Agricultural Bank of China and China Merchants Bank, each holding stock positions valued at over 100 billion yuan.

Notably, there are 98 stocks that appeared on the radar for both social security and pension funds, predominantly grouped within the healthcare, automotive, and basic chemical sectors.

High-dividend stocks have found a favored status among institutional investors, with significant dividends within the holds of pension and social security funds.

In the realm of public funds, notable investments are tallied in corporations such as Kweichow Moutai and Nio, indicating a consistent preference for high-growth, stable dividend-distributing firms.

Long-term investment strategies of these institutional investors encourage stability, making them less sensitive to short-term stock price fluctuations.

Retrospective reviews of these stocks align with the overarching trend of price growth—corporations with significant backing from long-term investors demonstrated a remarkable streak of robust performances over time.

03

Are We in the Middle of a Bull Market?

The influence of long-term funds, particularly from insurance firms, pension plans, and social security contributions has a mostly constructive impact on the stock market.

Numerous parallels can be drawn with global examples, particularly the U.S. pension system, arguably one of the world’s most robust asset pools.

Comprising public pensions, corporate annuities, and personal retirement accounts like 401(k)s and IRAs, this colossal system manages over $30 trillion in assets, establishing a sizeable market presence.

These long-term funds enter equity markets, providing stability in capital and a consistent influx of cash flow.

For instance, substantial shares from 401(k) plans and IRA accounts flood into the market predominantly through mutual funds, where equity allocations are notably high.

The perpetual inflow of such long-term capital aids in bolstering and stabilizing the markets, especially during downturns, when pension funds provide a crucial cushion.

Strategically, these pension funds typically favor high-dividend yielding stocks, demonstrating a preference that nurtures overall market morale and investor confidence.

The entrance of long-term funds has shifted the investor landscape—notably, institutional investors are progressively dominating the market, thus increasing professionalism and efficiency while curtailing amateur speculative behaviors.

The increasing involvement of pension funds also propels growth in the fund industry, expanding the array of investment strategies available.

The longstanding relationship between pensions and equity markets has cultivated a positive feedback loop:

Pensions strengthen market stability through sustained growth, while consistent strong returns from equities further enhance their attraction for pension investments, encouraging increased market participation

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Since the 1970s, pensions have been vital in fostering significant bullish trends in U.S. equities.

This infusion of long-term capital also bolsters investor confidence in markets—many American families indirectly engage in the stock market through their pension plans, supplementing household income while ensuring retirement savings, enhancing consumer capacity, and sustaining growth in the predominantly consumption-oriented U.S. economy.

This track record represents proven successful experiences.

As the saying goes, lessons from others can yield valuable insights.

Fortunately, there is a recognition among Chinese regulators of the necessity for reform towards this directionWith the additional inflow of more long-term funds, the future of China’s A-shares appears increasingly promising.

Riding this wave of optimism, investors may find merit in focusing on long-term institutional positioning or consider participating in the market through index funds such as the A500 or CSI 300 index funds.

In fact, low-cost, broad-based ETFs have emerged as a vital channel for capital entry into the A-share market.

For example, the Hu-Shen 300 ETF by E fund has attracted over 198.8 billion yuan since 2023, while the A500 ETF has witnessed a net inflow exceeding 13.878 billion yuan since its launch on November 19 last year.

As a leading institutional player, E fund has pioneered low-cost investments in the domestic market.

As of January 23, 2025, E fund managed 87 ETF products, including the A500 and Hu-Shen 300 ETFs, which are all subject to land lowest management and custody fees of 0.15% and 0.05%, respectively.

At present, the yield on 10-year government bonds is at 1.63%, while the Hu-Shen 300 boasts a yield of 3.36%, and the CSI 500 yields approximately 3.09%.

Investors optimistic about long-term opportunities within the A-shares should delve into low-fee, broad-based index funds such as E fund’s A500 ETF or Hu-Shen 300 ETF.

04

Concluding Thoughts

On September 24, 2024, the press conference hosted by the State Council marked a pivotal moment for China's A-share market.

The introduction of a series of impactful policies successfully bolstered market confidence, prompting a substantial rebound in A-shares

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