China Ramps Up Long-Term Capital Inflow into Stock Market with Major Insurer Investment Push

Chinese Regulators Push for Long-Term Capital Inflow into Stock Market

Chinese financial regulators are taking further steps to boost the inflow of long-term funds into the stock market. They plan to guide major state-owned insurers to increase both the scale and proportion of their investments in A-shares.

Starting in 2025, these insurers will strive to allocate 30% of their new premiums annually to invest in A-shares. This is expected to inject hundreds of billions of yuan in long-term funds into the equity market each year.

Insurance funds are seen as a key source of long-term capital due to their stable sources, large scale, and long payout cycles. The second round of pilot programs for long-term equity investments by insurance funds, with a scale of no less than 100 billion yuan ($13.74 billion), will be rolled out in the first half of 2025.

Public offering funds are also expected to increase their holdings of A-shares by at least 10% annually over the next three years.

This new plan builds on previous policies aimed at encouraging the inflow of medium- and long-term capital into the market. The Central Economic Work Conference held in December 2024 emphasized the stabilization of stock markets and resolution of bottlenecks for the entry of medium- and long-term capital into the market.

Experts see this plan as a practical and detailed blueprint for implementation, providing strong support for the growth of long-term capital. It is expected to bring at least 200 billion yuan in institutional medium- and long-term incremental funds to A-shares annually over the next three years.

The plan not only sets clear targets for raising investment proportions for certain institutions but also extends the performance evaluation period for fund managers and investors. This is intended to smooth out the impact of short-term market fluctuations on performance and improve investment returns.

Many prominent domestic and international investment institutions have expressed optimism about the outlook of the Chinese stock market. Foreign capital has become an important source of funds for A-shares, with a significant portion coming from medium- and long-term capital.

This latest plan is expected to contribute to a virtuous cycle of stable and healthy capital market operations and high-quality development of the real economy.