Shares of China Life Insurance, the mainland's largest insurer, soared yesterday, propelled by its earnings results, especially from its investment portfolio.
The stock rose its 10 per cent daily limit in Shanghai, closing at 56.09 yuan. In Hong Kong, it rallied for the seventh consecutive trading day, ending at a record-high HK$37.15, up 5.69 per cent on the day and 34.6 per cent for the recent run-up.
Net investments income rose by 112.25 per cent and accounted for 23.73 per cent of its 101.43 billion yuan in revenue. However, the insurer warned that its investment yield in the second half might not be as high as in the first due to market volatility.
Liu Lefei, the company's chief investment officer, said there would be 'some pressure' to maintain its investment yield. Net investment yield rose to 3.36 per cent in the first half from 2.12 per cent a year ago.
'If the mainland capital markets, particularly the stock market, have big fluctuations, this could affect the investment income,' he added.
Citigroup in a report said China Life's annualised net investment yield was 6.7 per cent but could moderate in the second half.
The insurer, however, was optimistic about investment returns in the second half.
'Our prudent investment strategy is focused on fixed income investments,' Mr Liu said, adding that they would benefit from the continued rate increases on the mainland. 'Even if investment income in the second half is not higher than the first half, it could provide steady income for us in the long term.'
The China Insurance Regulatory Commission last month allowed insurers to invest 15 per cent of their total asset in overseas equities under the qualified domestic institutional investor scheme.
Mr Liu reiterated that the company would take a gradual approach to overseas investments.
'China Life's business is doing well but that's no surprise to the market,' said an analyst with a US brokerage firm. Ping An Insurance also did well and got a contribution from its banking business, he said.