JP Morgan: The risk of dilution is relatively low with the Ministry of Finance's investment in domestic insurance. It is recommended to take advantage of the dip to buy China Life Insurance (02628) and Ping An Insurance (02318).

JPMorgan released a research report stating that major state-owned insurance companies have announced capital replenishment plans, including the Ministry of Finance injecting 35 billion RMB and 7 billion RMB into China Life Insurance Group and China Taiping Group, respectively, and subscribing to a private placement of up to 15 billion RMB in PICC GROUP (01339) A-shares. The bank believes that although the news seems surprising on the surface, the structure is more reassuring, as the funds are primarily injected at the parent group level rather than requiring listed insurers like China Life Insurance (02628, 601628.SH) to raise funds from the market again; the potential equity financing of PICC GROUP is also mainly limited to the A-share listed entity, which helps alleviate concerns about immediate dilution for listed insurance companies. The bank noted that capital calls are not necessarily positive, as they may raise questions regarding solvency, regulatory pressure, and future shareholder returns; however, support at the group level helps state-owned insurance companies maintain a more stable stock allocation, support dividend growth, and strengthen their role in industry consolidation. The solvency ratio remains adequate, but the pace of stock allocation for insurance companies is slowing down in the second quarter of 2026, indicating that the room for further increasing stock exposure is narrowing; the incremental capital at the state-owned group level helps retain short-term flexibility in asset allocation while ensuring solvency. The bank recommends taking advantage of the weakness to acquire China Life Insurance H-shares, which are currently trading at an expected price-to-earnings ratio of 5 times for 2027 and a dividend yield of 4%. Additionally, Ping An Insurance (02318) has a dividend yield of 7%, which may perform even better.