According to the China Insurance Asset Management Association, the holding of gold in insurance may reach 208 tons to 555 tons, accounting for less than 2% of the total global gold demand. This is positive for the insurance industry and the Chinese gold market.
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China Ping An (601318. SH, 2318. HK), a subsidiary of Ping An Life, completed the first Shanghai gold pricing transaction of domestic insurance institutions on the Shanghai Gold Exchange; China Life (601628. SH, 2628. HK) on the Shanghai Gold Exchange, completed the first gold inquiry transaction of domestic insurance institutions; China National Insurance (601319. SH, 1339. HK) subsidiary People's Insurance Company completed the first gold bidding transaction in the domestic insurance industry through the Shanghai Gold Exchange system.
The landing of the above transactions marks that the long-awaited insurance funds have gone from planning to reality. Ping An Life said that it attaches great importance to this historical opportunity and will actively study the investment allocation planning of the gold business to optimize the asset allocation structure and improve the efficiency of the use of funds. In terms of allocation planning, from the perspective of diversifying investment risk and optimizing the portfolio structure, gold is included in the annual and medium- and long-term strategic asset allocation plan; China Life said that it will adhere to the long-term investment concept in the future, adhere to a sound and prudent investment style, give full play to the unique allocation value of gold in optimizing the portfolio, hedging risk, and resisting inflation, and further improve the long-term risk-return ratio of the company's overall portfolio; the latest said that gold as an important risk-free asset, and the asset-risk-to-value-to-value-to-value.
On February 7, the insurance funds investment gold business pilot "set sail", a total of 10 pilot insurance companies, respectively, people's insurance, China Life, Taiping Life, China Credit Insurance, Ping An Life Insurance, Ping An Life, Taibao Property Insurance, Tai Life Insurance, Taikang Life, New Chinese Life. In addition to the above three insurance institutions, as of the press release, other insurance institutions have not yet disclosed relevant information.
On March 24, the Shanghai Gold Exchange announced that after consideration, it was agreed to absorb people's insurance, China Life, Ping An Life, and Tai Life Insurance to become members of the Shanghai Gold Exchange.
According to the "Gold Investment in Insurance Asks" released by the World Gold Council at the end of last year, insurance funds may become important marginal pricemers in the gold market, but the overall balance of global gold supply and demand has been controllable. Wang Lixin, CEO of the World Gold Council in China, said that the pilot gold business of insurance capital is mainly to open up a new demand side for gold, and may also be one of the trading parties in the future, which is of positive significance to the Chinese insurance industry and the Chinese gold market.
It is worth noting that after the entry of insurance, will it affect the price of gold?According to the China Insurance Asset Management Association (hereinafter referred to as the "China Insurance Asset Management Association"), in the medium and long term, the holding of insurance gold may reach 208 tons to 555 tons, and the marginal impact of the annual increase in gold spot demand brought about by the new gold allocation demand under the smooth allocation of insurance funds is controllable, accounting for the proportion of total global gold demand within 2%. In the short term, gold has strong financial attributes, and the news of the entry of insurance funds may have a certain impact on the price of gold.
“One of the goals of this round of piloting may be to increase the gold pricing power in China’s capital market with insurance funds, similar to the central bank’s gold purchase logic.” CITIC Securities Research Report analysis said that the impact of insurance funds on gold prices is similar to that of central bank purchases. The gold allocation of central banks and insurance funds is a long-term behavior, and both tend to be low-key and slow to buy in purchases to avoid short-term price shocks. In addition, both central banks and insurance funds can affect market prices by increasing demand and forming a declaration effect.
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On February 7, the General Administration of Financial Supervision issued the "Notice on Piloting the Investment of Insurance Funds in Gold Business" (hereinafter referred to as the "Notice"), the scope of the pilot investment gold includes: gold spot real contracts listed or traded on the main board of the Shanghai Gold Exchange, gold spot deferred settlement contracts, Shanghai gold centralized pricing contracts, gold inquiry spot contracts, gold inquiry swaps and gold leasing business.
In the specific pilot investment gold operation, the above-mentioned "Notice" requires that the pilot insurance company's investment in gold should be flexible to use bulk transactions, inquiry transactions, bidding transactions and other methods to build positions in batches to avoid the impact on the market due to abnormal trading behavior. Pilot insurance companies should use monetary funds to invest in gold, and shall not handle the physical out and storage of gold. At the same time, the pilot insurance company should strictly implement the investment ratio requirement, and the total investment gold book balance does not exceed 1% of the company's total assets at the end of the previous quarter.
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Wang Lixin said that as of the end of the fourth quarter of 2024, the total assets of China's insurance industry as a whole reached about 35.9 trillion yuan. If 1% of the industry’s total assets are invested in gold, the potential increase in gold demand could reach 528 tonnes. Now the first batch of 10 insurance companies allowed to participate in the pilot program has a total assets of about 57% of the total assets of China's insurance industry, about 20.1 trillion yuan. If these companies invest 1% of their total assets in gold, the potential demand for gold in the coming year is about 295 tons.
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