Ping An CIO Benjamin Deng: Maintaining a "Double Barbell" Asset Allocation Strategy, Seeing Potential in Investment Opportunities Brought by Energy Transition

Rhea-AI Summary

Ping An's Chief Investment Officer, Benjamin Deng, announced at the Asian Investment Summit that the company will maintain its 'double barbell' asset allocation strategy. This approach balances long-duration interest rate bonds with risk assets like equities and real estate to ensure stable returns.

Ping An's insurance funds investment portfolio reached RMB4.93 trillion by March 2024, yielding a 5.4% average return over the past decade. Deng highlighted the growth potential in China's energy transition, which demands RMB487 trillion in green investments over 30 years.

Ping An sees strong investment opportunities in renewable energy and electric vehicles, with high-dividend stocks rising 18% compared to the CSI 300 Index's 6.4% increase. The company remains optimistic about China's GDP growth and is open to partnerships with foreign investors in sustainable development projects.

Positive

• Ping An's insurance funds investment portfolio reached RMB4.93 trillion by March 2024.
• Average investment yield of 5.4% over the past decade, outperforming long-run investment return assumptions.
• High-dividend stock portfolio increased by 18% this year.
• Optimistic about investment opportunities in China's energy transition and EV market.
• Ping An's responsible investment accounts for 15% of its portfolio, reaching RMB725.3 billion.
• Green investment reached RMB128.6 billion.
• Ping An is open to collaborating with foreign investors for sustainable development.

Negative

• No specific new revenue figures or profit margins were reported in the PR.
• Potential risks associated with high exposure to China's energy transition and economic cycles.

HONG KONG and SHANGHAI, June 4, 2024 /PRNewswire/ -- China's macroeconomy and capital market development remains steady this year, and Ping An will maintain a balanced "double barbell" asset allocation to ensure stable returns, said Benjamin Deng, Chief Investment Officer of Ping An Insurance (Group) Company of China, Ltd. (hereafter "Ping An", the "Company" or the "Group", HKEX: 2318 / 82318; SSE: 601318). Mr. Deng was speaking at Asian Investor's Asian Investment Summit in Hong Kong.

Mr. Deng said he also sees growth potential in sustainable investment opportunities brought by China's energy transition.

Maintaining a "double barbell" allocation in different macroeconomic cycles

Ping An's insurance funds investment portfolio reached RMB4.93 trillion at the end of March 2024. Ping An has always upheld a balanced and prudent approach towards long-term strategic asset allocation. Over the past decade, the average comprehensive investment yield of Ping An's insurance funds investment portfolio was 5.4%, higher than the embedded value long-run investment return assumption.

Mr. Deng said: "Asset allocation strategy requires patience to maintain a balanced and prudent approach across different macroeconomic cycles. The 'double barbell' allocation structure can ensure a very stable investment allocation and has given us quite good returns this year."

The "double barbell" allocation refers to investment in a large number of long-duration interest rate bonds on one end, including high-quality fixed-income products such as government bonds and local government bonds and risk assets, including equities, real estate, private equity funds and other investments, on the other end.

There is also a "small barbell" in risk assets – one end with growth stocks that can contribute to China's high-quality development and the construction of a modern industrial system, and the other end with stable stocks with high dividends, accounting for more than half of the risk asset portfolio. Its main allocation comprises state-owned enterprises (SOEs) across sectors such as financial services, energy, telecommunication, and infrastructure.

"These state-owned enterprises have stable cash flows and business foundations and are characterized by low valuations and high dividends," Mr. Deng said. Since the beginning of this year, Ping An's high-dividend stock portfolio has risen 18%, higher than the approximately 6.4% increase of the CSI 300 Index.

Seeing huge investment opportunities in China's energy transition 

According to China's Green Finance Committee (GFC), the total demand for green and low-carbon investments in China will reach RMB487 trillion over the next 30 years.

Mr. Deng is optimistic about investment opportunities arising from the transition to sustainable energy, including renewable energy and electric vehicles (EVs). He noted that he observed EVs everywhere during a recent visit to a township in Guangdong province. This indicates the consumption potential of EVs in fourth-tier cities, and the booming development of EVs in lower-tier markets.

"Sales and market penetration of EVs are growing at a rapid pace," he said, "and the trend is set to continue steadily, making it attractive to invest in EV-related infrastructure such as charging stations."

Mr. Deng also noted that China's energy transition is bringing some unanticipated benefits. He referenced a solar farm built in the desert in Xinjiang. Millions of solar panels not only generate clean electricity, but also minimize sand erosion and enhance soil moisture. As a result, the area has been transformed the desert into grasslands, attracting shepherds and their sheep.

Welcoming cooperation with overseas institutions for China's long-term development

Mr. Deng said he expects China's GDP to achieve a growth rate of around 5% this year. He is confident in the long-term stability and growth of China's economy and looks forward to working with foreign investors who are willing to allocate funds to the Chinese market to seize investment opportunities in new energy and sustainable development in China.

"Ping An has its own asset management company as well as platforms for private equity and private debt," noted Mr. Deng. ""Under China's carbon neutrality target, local expertise is crucial for identifying long-term investment opportunities. Foreign investors engaged in this field can consider partnering with local experts like Ping An," he said. "We are willing to provide the professional knowledge and support them to explore investment opportunities related to China's carbon neutrality together."

As one of China's largest asset owners, Ping An is a major investor in green and sustainable projects and enterprises. The Group is the first asset owner in China to be a signatory of the UN-sponsored Principles for Responsible Investment (PRI) and Climate Action 100+. As of December 2023, Ping An's responsible investment accounted for 15% of its insurance funds investment portfolio, reaching RMB725.3 billion, and its green investment reached RMB128.6 billion.

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About Ping An Group

Ping An Insurance (Group) Company of China, Ltd. (HKEx:2318 / 82318; SSE:601318) is one of the largest financial services companies in the world. It strives to become a world-leading provider of integrated finance, health and senior care services. Under the technology-driven "integrated finance + health and senior care" strategy, the Group provides professional "financial advisory, family doctor, and senior care concierge" services to its 234 million retail customers. Ping An advances intelligent digital transformation and employs technologies to improve financial businesses' quality and efficiency and enhance risk management. The Group is listed on the stock exchanges in Hong Kong and Shanghai. As of the end of 2023, Ping An had RMB11,583,417 million in total assets. The Group ranked 16^th in the Forbes Global 2000 list in 2023 and 33^rd in the Fortune Global 500 list in 2023.

For more information, please visit www.group.pingan.com and follow us on LinkedIn - PING AN.

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SOURCE Ping An Insurance (Group) Company of China, Ltd.

FAQ

What is Ping An's asset allocation strategy as of June 2024?

Ping An is maintaining a 'double barbell' asset allocation strategy, balancing long-duration interest rate bonds with risk assets like equities and real estate.

What is the performance of Ping An's high-dividend stock portfolio?

Ping An's high-dividend stock portfolio increased by 18% this year, compared to the CSI 300 Index's 6.4% rise.

How much is Ping An's insurance funds investment portfolio worth in 2024?

Ping An's insurance funds investment portfolio reached RMB4.93 trillion by March 2024.

What are the growth prospects for Ping An in the energy transition sector?

Ping An sees significant opportunities in renewable energy and electric vehicles, driven by China's demand for RMB487 trillion in green investments over the next 30 years.

What is Ping An's average investment yield over the past decade?

Ping An's average comprehensive investment yield over the past decade is 5.4%.

What is the ratio of Ping An's responsible investment in its portfolio?

Responsible investment accounts for 15% of Ping An's insurance funds portfolio, totaling RMB725.3 billion.

Is Ping An collaborating with foreign investors?

Yes, Ping An is open to partnerships with foreign investors for sustainable development and new energy projects in China.