Finance links to the October 31 news (Reporter Wang Hong) With the release of the third quarterly reports of listed companies, the investment dynamics of "long money" have also surfaced. Finance links reporter noticed that the 500 billion Honghu Fund jointly initiated by China Life (02628) and New China Insurance (01336) appeared in the top ten shareholders' list of Inner Mongolia Yili Industry (600887.SH) and Shaanxi Coal Industry (601225.SH), with shareholding ratios of 1.88% and 0.72%, respectively. Industry insiders said that in terms of investment, the Honghu Fund prefers to invest in high-quality large-cap blue chip stocks, especially those with high dividend rates. China Life's relevant person in charge had previously stated that the Honghu Fund chooses listed companies with obvious competitive advantages, sound governance structures, and good business profit models to buy and hold for the long term. Recently, regulatory voices have indicated support for insurance institutions to set up private equity securities investment funds and increase market stabilization efforts. Experts predict that there will be more insurance private equity funds to come. Already invested in Inner Mongolia Yili Industry and Shaanxi Coal Industry, Honghu Fund prefers high-quality large-cap blue chip stocks In order to further promote the solution to the problem of "long money and short allocation" for insurance companies, China Life and New China Insurance jointly launched the Honghu Zhiyuan (Shanghai) Private Equity Securities Investment Fund Co., Ltd. with a total size of 50 billion yuan, which was officially launched on March 4, 2024. As of September 30, the Honghu Fund had a paid-in capital of 32.01 billion yuan, mainly invested in key industries related to national economy and people's livelihood, achieving positive results. Finance links reporters noticed in the recently disclosed third quarterly reports that the Honghu Fund appeared in the top ten shareholders list of Inner Mongolia Yili Industry and Shaanxi Coal Industry. Specifically, as of October 31, Honghu Zhiyuan (Shanghai) Private Equity Investment Fund Limited held 119.38 million shares of Inner Mongolia Yili Industry, accounting for 1.88% of the company's total share capital and ranking 7th among Inner Mongolia Yili Industrys top ten shareholders. The shares held by Honghu Zhiyuan are A-share tradable shares, which means that these shares can be freely traded on the secondary market without restrictions on transferability. In addition, Honghu Zhiyuan (Shanghai) Private Equity Investment Fund Limited also became the tenth largest circulating shareholder of Shaanxi Coal Industry in the third quarter. As of October 31, Honghu Zhiyuan (Shanghai) Private Equity Investment Fund held 70.1623 million shares of Shaanxi Coal Industry, accounting for 0.72% of the circulating A-shares and the market value at the end of the period reached 1.935 billion yuan. Yu Xiaoming, a senior investment advisor at Jufeng Investment, told Finance Links reporters that based on the investment in Inner Mongolia Yili Industry and Shaanxi Coal Industry, the Honghu Fund prefers to invest in high-quality large-cap blue chip stocks, especially those with high dividend rates. Both of these companies are industry-leading blue-chip enterprises with large market capitalization, good liquidity, and high market influence. "The investment direction of the Honghu Fund is very clear, mainly focusing on key industries related to national economy and people's livelihood, such as infrastructure, healthcare, green energy, and other fields. These industries will undertake important social responsibilities in the future, especially in promoting sustainable development," Yu Xiaoming also said. Leveraging the advantages of insurance funds, there may be more insurance fund entering the market in the future What are the stock selection criteria for the Honghu Fund? The relevant person in charge of China Life said that as a pilot reform, the Honghu Fund chooses listed companies with clear competitive advantages, sound governance structures, and good business profit models to buy and hold for the long term. In addition, when the stock market is sluggish, market confidence is insufficient, and the stock prices of listed companies are significantly undervalued, the Honghu Fund firmly buys in. Zhou Jin, a partner at PricewaterhouseCoopers Financial Industry Management Consulting, told Finance Links reporters that several insurance companies jointly established private equity investment funds. Through the investment of insurance funds in secondary market stocks through private equity fund companies, under the current accounting standards, this can be attributed to long-term equity investment, using equity method accounting, thus avoiding fluctuations in current profits caused by the market value accounting method of direct stock investment. "It is precisely because insurance funds can leverage the advantages of long-term value investment that for some investment targets in the industry downturn and undervalued areas, as well as enterprises with long-term development space and appreciation potential, insurance funds can increase allocation from the perspective of long-term asset-liability matching and cross-cycle investment returns, hold for the long term, and improve the capital market's multi-level resource allocation function while obtaining higher long-term investment returns," Zhou Jin added. Finance Links reporters noted that Li Yunze, director of the China Banking and Insurance Regulatory Commission, recently stated at the opening ceremony of the Finance Street Forum Annual Meeting that they support insurance companies meeting the conditions to set up private equity securities investment funds and increase market stabilization efforts. "This means that there will be more insurance private equity funds to come," Zhou Jin said. This article is reprinted from "Finance Link". Editor: Liu Xuan.