Hong Kong and A-share markets have finally witnessed a major counteroffensive.

On September 24th, the three major A-share indices surged with increased trading volume. The Shanghai Composite Index rose by 4.15%, reclaiming the 2800 point threshold, while the Shenzhen Component Index climbed by 4.36%. The ChiNext Index saw an even more dramatic increase of 5.54%. The Hong Kong stock market also experienced a strong pull, with the Hang Seng Index soaring by 4.13%.

The financial sector, as the core of the Hong Kong and A-share markets, naturally responded to the news, with insurance, securities, banking, and diversified finance all experiencing significant gains. Among these, the insurance sector, with Ping An's leading performance, was particularly eye-catching. Today, Ping An's A-shares surged by 5.47%, and its H-shares jumped by 7.17%, with the H-shares having already embarked on a ten-day winning streak.

The overall market trend is inseparable from significant catalysts, with the introduction of major policies acting as the trigger for all of this. Against this backdrop, the market opportunities for insurance companies, represented by Ping An, have become increasingly clear.

01

A Good Day and Night, the Elephant Dances

Amidst the global chorus of rising markets, the market has long suffered from the underperformance of Hong Kong and A-shares.

Now, a series of favorable policy introductions have propelled the market into a reversal.

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On September 24th, the State Council Information Office held a press conference, where significant statements revealed multiple favorable policies.

The most direct impact on the market comes from the following five points:A reserve requirement ratio (RRR) cut of 0.5 percentage points will be implemented soon. There may also be another interest rate cut of 0.25-0.5 percentage points before the end of the year.

The central bank's policy interest rates will be reduced, with the 7-day reverse repo operation rate lowered by 0.2 percentage points, from the current 1.7% to 1.5%, guiding the Loan Prime Rate (LPR) and deposit rates to move downward in tandem, maintaining the stability of commercial banks' net interest margins.

New monetary policy tools will be created to support the stable development of the stock market.

Existing mortgage loan rates will be reduced, guiding commercial banks to bring existing mortgage loan rates closer to newly issued mortgage loan rates, with an expected average reduction of about 0.5 percentage points.

The minimum down payment ratio for second-home mortgages at the national level will be reduced from 25% to 15%, unifying the minimum down payment ratio for mortgages.

This month, the Federal Reserve cut interest rates by 50 basis points (BP), marking the end of this ultra-long interest rate hiking cycle and providing a more relaxed environment for major global economies to cut interest rates. Previously, central banks such as the European Central Bank, the Bank of England, the Bank of Canada, and the Riksbank have all cut interest rates to varying degrees.

The announcement of the RRR cut and interest rate cut by our country's central bank is in line with market expectations for the development of subsequent monetary policy trends, and is expected to release long-term liquidity of about 1 trillion yuan, creating a more abundant funding environment for the market. More importantly, the central bank will also consider the market liquidity situation within the year and may choose to lower the reserve requirement ratio at the right time to further alleviate liquidity issues.

In addition, there is the injection of "precision liquidity" aimed at the stock market, namely the creation of swap facilities for securities, funds, and insurance companies, and special re-lending for stock buybacks and increases.

The former encourages insurance companies, securities firms, and funds to purchase stocks, using these as collateral to obtain high-liquidity assets such as government bonds and central bank bills from the central bank.

These types of assets are of high quality in terms of credit rating and liquidity, which can greatly enhance the funding acquisition capabilities and stock increase capabilities of relevant institutions. Moreover, the funds obtained by institutions through this tool can only be used for investment in the stock market, highlighting the positive cycle effect. The initial operation scale of the swap facility is 500 billion yuan, and there may be a second or even a third 500 billion yuan in the future.It is worth mentioning that this press conference referred to the private securities investment fund jointly established by China Life and New China Life, and stated that in the future, similar funds will be supported for other insurance institutions that meet the conditions. As the policy level continues to create a favorable environment and strengthen patient capital in insurance, it is also bringing new opportunities for insurance companies.

The latter is to guide banks to provide loans to listed companies and major shareholders, and the funds can only be used for share buybacks and increases in listed company stocks. Companies and major shareholders can obtain funds at a low cost and directly purchase their own stocks in the market, which helps stabilize the company's stock price and enhance investor confidence.

At the same time, companies and major shareholders themselves also have sufficient motivation to do such things. For example, if a listed company's dividend yield is 6%, and the cost of obtaining funds through stock buybacks and increases in loans is 2.25%, it is undoubtedly a profitable deal.

Through this set of major moves, it can be seen that the central bank's determination and strength to boost the stock market are unprecedented, and the core of market stability lies in financial stability, which is also the key to today's strong financial funds.

In addition, at this meeting, the central bank governor Pan Gongsheng said that at present, the national debt yield curve, as an important price signal, still has problems such as insufficient long-term pricing and insufficient stability. The central bank's risk warning on long-term national debt yields is to curb the herd effect, prevent one-sided downward movement of long-term national debt yields, and maintain good trading order in the bond market. In the context of interest rate cuts, the policy environment of caring for interest rates also provides stable operating conditions for financial institutions such as insurance companies.

Standing at the current opportunity to dig into big finance, in terms of stability, insurance > banks > securities firms; in terms of elasticity, securities firms > insurance > banks. Overall, the comprehensive cost-effectiveness of insurance is higher. Especially for high dividend insurance companies like Ping An, they are more likely to become the first choice for funds.

Looking at the reduction of down payments, it is undoubtedly a direct benefit to real estate sales and helps to reduce the risk exposure of insurance companies' real estate investments.

In addition, reducing the interest rate of existing loans helps to reduce the debt pressure of residents and enhance their willingness to consume. As of the end of June 2024, the balance of personal housing loans in China was 37.8 trillion yuan. Reducing the interest rate of existing loans by 1 percentage point can release more than 300 billion yuan of purchasing power, and with the improvement of expectations leading to an increase in consumption tendency, this data will only be larger.

Insurance consumption, as one of the optional consumptions, will undoubtedly benefit from the overall improvement of residents' willingness and ability to consume.Overall, economic recovery and the warming of capital markets jointly provide a safeguard for the business expansion and investment returns of insurance companies, with the insurance industry now experiencing resonance on both the asset and liability sides.

A research report from China Merchants Securities suggests that with the triple catalysts of the stock market, real estate, and interest rates on the asset side, the constraints on the profit performance and stock valuation of the life insurance sector are expected to be fully unlocked.

At the current juncture, the insurance sector has become an indispensable key point.

Today's significant rise in insurance stocks, represented by Ping An, is demonstrating the market's strong confidence and expectations for insurance stocks.

However, it cannot be denied that after undergoing industry transformation and restructuring, the differentiation within the insurance industry is intensifying, and the competitive landscape is becoming increasingly complex.

Against this backdrop, if one were to clear away the fog, what characteristics would those enterprises that can truly continue to lead in the market possess?

Ping An might be a sample worth focusing on and studying repeatedly.

02

Rolling stones up the mountain, perseverance without fault.In ancient Greek mythology, Sisyphus continuously pushed the "boulder" up the mountain. Despite the steep slope causing the boulder to roll back down, he persisted in this endless cycle, never ceasing.

Looking back at the development history of Ping An, the company has undergone a deep strategic iteration every decade. In this process, Ping An, like Sisyphus pushing the boulder up the mountain, has been filled with challenges and difficulties.

However, through continuous evolution and innovation, Ping An has ultimately achieved leapfrog development time and time again.

The continuously drawn "J-curve" has also become a testament to Ping An's constant transformation.

In other words, although Ping An may face certain operational pressures in the early stages of reform and transformation, it will quickly rebound and enter a new phase of higher growth as the reform measures are gradually implemented and the market adapts.

Entering 2024, Ping An continues to deliver impressive results.

Previous data shows that in the first eight months of this year, Ping An achieved a total premium income of 620.706 billion yuan, setting a historical record for the same period, and the year-on-year growth rate expanded from 0.29% in the first two months to 7.64% in the first eight months.

Matching the premium income is a series of core indicators with impressive results, deeply interpreting the effectiveness of Ping An's reforms.

Although the scale of agents in Ping An's life insurance and health insurance has been significantly streamlined, this transformation has brought about a significant improvement in the quality and efficiency of the business.Data indicates that Ping An's life insurance agents' average new business value per person has steadily increased from 56,791 yuan per person per year in 2019 to 90,285 yuan per person per year in 2023. At the same time, the average monthly income of agents has also grown from 6,309 yuan in 2019 to 9,813 yuan in 2023.

Now, the number of Ping An agents has stabilized, and the gap between the curve of average new business value per person and the number of agents continues to expand, indicating that Ping An is moving towards a more refined and efficient development direction. The optimization and upgrading of the agent channel are bringing higher business value and market competitiveness to the company.

It is not difficult to see that after undergoing deep reforms, Ping An has ushered in the dawn.

The continued high-growth trend also means that after the brief pressure brought by the reforms, Ping An is starting a new round of growth. The continuous internal cultivation has also made Ping An's growth more breakthrough and explosive at this time.

As Ma Mingzhe, Chairman of Ping An Insurance (Group) Company of China, Ltd., wrote in his speech at the semi-annual report, "Only by accumulating strength halfway can we climb hills and cross ridges; only by setting sail with the trend can we break waves and move forward."

Ping An's "rolling stone up the mountain" journey, although full of challenges, is solid and powerful at every step. With the continuous improvement of the external environment, Ping An has stood on a new starting point.

03

In the new era, riding the wind and breaking waves

As the results of the reforms continue to be realized, the deeper value growth charm of Ping An now lies in the in-depth evolution of its strategy.Peter Drucker, hailed as the "father of modern management," once said about the relationship between efficiency and effectiveness: "Efficiency is doing things right, while effectiveness is doing the right things." For businesses, effectiveness is indispensable, not efficiency.

If the life insurance reform represents Ping An's initiative to improve efficiency, then the strategic layout around "comprehensive finance + medical care and elderly care" demonstrates Ping An's far-sighted pursuit of effectiveness. It not only focuses on the execution method but also on the correctness of the business direction and the accuracy of market positioning.

It can be said that this strategy is an important measure for Ping An to adapt to the high-quality development trend of the insurance industry. It goes beyond mere efficiency improvement. More importantly, it is constantly stimulating new growth momentum for the company and pushing Ping An into a new stage of growth.

Looking back at each decade of Ping An, its strategic transformation and innovative development at different historical stages have profoundly reflected its keen insight into market changes and accurate grasp of future trends.

From the first decade, pioneering business from scratch, to the second decade, starting to practice comprehensive finance driven by service, and then to the third decade, initiating technology-driven and gradually exploring the "finance + technology" strategy.

Now entering the fourth decade, driven by demand, Ping An is continuously advancing the "comprehensive finance + medical care and elderly care" strategy and continuously releasing its flywheel effect.

In the new strategic phase, Ping An takes the ecosystem as a starting point and deeply anchors it with high-quality development of the industry. By building a customer-centered ecosystem, Ping An has achieved deep integration of business and maximization of value.

In terms of comprehensive finance, Ping An integrates multiple financial sectors such as banking, insurance, securities, and trusts under its umbrella to provide customers with one-stop financial services.

In terms of medical care and elderly care, Ping An is actively deploying and building a medical care and elderly care ecosystem to provide customers with a full life cycle of services from health management, disease prevention to elderly care, meeting the growing market demand.It is not difficult to see through Ping An's semi-annual report that its medical and elderly care ecosystem is accelerating the release of growth value, becoming a strong engine driving the company's development.

In the first half of 2024, 28.6% of Ping An's new customers came from the medical and elderly care ecosystem, and customers who enjoyed the group's medical and elderly care ecosystem service rights accounted for more than 68% of the new business value of life insurance.

As of the end of June, among Ping An's 236 million personal customers, more than 63% of customers used the services provided by the medical and elderly care ecosystem, with an average contract number of about 3.36 and an average AUM of about 57,500 yuan, which are 1.6 times and 3.8 times that of personal customers who do not use the medical and elderly care ecosystem services, respectively.

It can be said that Ping An's development strategy has long shifted from a traditional financial service provider to an internationally leading comprehensive financial and medical health service provider. Through the promotion of the "comprehensive finance + medical and elderly care" strategy, Ping An not only plays an important role in serving national strategies, social needs, and people's livelihood security but also continues to consolidate and expand its leading position in the market.

With the increasing demand for financial services and medical and elderly care services among residents, Ping An's future development prospects are becoming more and more anticipated.

From a deeper perspective, the evolution of the strategic model also implies a revaluation of the company's commercial value, and with the continuous verification of performance improvement, Ping An's market performance is also expected to bring more imagination.

04

Conclusion

In the long river of the insurance industry, Ping An is like a light boat, steadily walking out of the pain of transformation, and smoothly crossing thousands of mountains and ridges.Now, as the industry enters a new era of "asset-liability" resonance, the potential of Ping An's value is facing an important inflection point for accelerated release.

In the warm policy environment, with its stable operations and strategic upgrades, Ping An has demonstrated the dual charm of "growth and stability," which aligns with the ideal target portrait of current market institutions.

In the present moment when confidence is more precious than gold, the potential evolution of Ping An's strategic model and reassessment of its commercial value will undoubtedly make a positive contribution to the entire insurance industry and the transformation and development of the national economy.

As Ping An continues to delve deeper into integrated finance, medical care, and elderly care, it is certain to ride the winds and waves on its future development path, creating more value and miracles.