Ping An Insurance said it would add holdings in fixed-income investments and bonds in the second half of this year as capital markets remain uncertain on tight liquidity.
"The mainland economy has stabilised but there are uncertainties in the medium and long term," said Timothy Chan, Ping An's chief investment officer. He expects tight liquidity to add pressure to the market.
Ping An would maintain a stable investment strategy, said Chan, and would increase fixed-income investments and bonds from both capital and non-capital markets.
Analysts were upbeat about the balanced growth of Ping An's insurance business, investment income and contributions from its banking unit, but the volatility in the capital markets remained a concern.
The fluctuation in value of Ping An's equities investments would be a potential risk in the second half, an analyst at China Merchants Securities said in a research note.
Chan said heavyweight stocks in the market would see pressure in profitability but the company would maintain its long-term investment because the stocks were low in valuation and offered high dividends.
"The valuation of smaller-cap stocks is relatively high and we don't rule out that there will be a correction in price, but it could also offer investment opportunities," Chan said.
Ping An's total investment income in the first half rose 90 per cent to 26.4 billion yuan (HK$33.21 billion), with net realised and unrealised gains from investment of 1.5 billion yuan, reversing a 3.1 billion yuan loss in the same period of last year.
The solvency ratio dropped to 162.7 per cent at the end of June from 185.6 per cent at the end of last year. President Ren Huichuan said the solvency ratio could be increased to 181.2 per cent after the 26 billion yuan of convertible bonds issued. "We are still waiting for regulatory approval, but I am confident that the bonds can be issued this year," he said.
Net insurance business profit went up 31.2 per cent to 12.8 billion yuan. Lee Yuan Siong, senior vice-president and chief insurance officer, said the firm would expand the insurance agent sales channel and enhance co-operation with banks.
Ping An shares rose 0.93 per cent to close at HK$54.35 yesterday.