(Yicai) Aug. 18 -- The amount and share of funds allocated by Chinese insurers to equity assets, including stocks and funds, reached a new record high at the end of the second quarter. Analysts attribute the growth to insurers increasing their equity positions and fair-value gains arising from a stock market rebound over the three months.

Insurers managed CNY40.8 trillion (USD6.05 trillion) of funds as of June 30, up 6.1 percent from the end of last year and 3.5 percent from the end of the second quarter of this year, according to the latest data from the National Financial Regulatory Administration. The allocation to core equity assets surged 12 percent to CNY6.39 trillion (USD947.6 million) from Dec. 31, while the share of those assets to the total managed climbed to 16.2 percent.

Non-banking finance teams at brokerages note that under the dual support of policy guidance for medium-to-long-term capital entering the equity market and the recovery of the secondary market, insurance fund allocation to stocks and funds continued to climb.

In the first half, the Shanghai Composite Index rose 3.2 percent, and the Shenzhen Component Index surged 20 percent, while the Star 50 Index and the ChiNext Index, which track the leading stocks on the two bourses’ technology boards, jumped 64 percent and 36 percent, respectively.

Sustained demand for savings-type insurance products continue to drive premium inflows, while the stock market recovery has lifted equity asset valuation and investment returns, according to the non-banking finance team at Guotai Haitong Securities led by Liu Xinqi.

Insurance funds, that have previously favored high-dividend, blue-chip stocks in the secondary market, are now exploring “new quality productive forces” in the primary market, participating through strategic placements and fixed-price investments, Guosen Securities noted.

But despite the record amount and share of funds allocated to equity assets, bonds still accounted for 51 percent of insurers’ total investments at the end of the second quarter, unchanged from the end of the first quarter, according to NFRA data. The proportion of bank deposits continued to decline, falling to 7.7 percent from 8.1 percent.

“In a low-interest-rate environment, insurance funds pay more attention to the structure of bond allocation,” Guosen Securities said. “Local government bonds, long-term interest rate bonds, and other comprehensive income bonds with accounting advantages will continue to be key directions for the fixed income foundation of insurance funds.”

Editor: Futura Costaglione