What's Really Going On! Chat Between Guotai Junan Strategy Chief and Dongwu Non-Banking Chief!

MaticHoleFiller · 2026-03-20T17:10:51+00:00

Different executives have provided contrasting perspectives on the recent stock market decline. Fang believed that small and mid-sized insurance companies face solvency pressure, making further market declines inadvisable. Sun, however, argued that new policies have not yet been implemented, and small and mid-sized companies reducing positions is a normal phenomenon with limited overall impact. He expects insurance capital inflows to exceed outflows, with limited impact on the market. The two experts' views are diametrically opposed and require further analysis.

MaticHoleFiller

2026-03-20 17:10:51

Abstract generation in progress

(Source: Wudaokou Jianghu)

In response to the recent continuous decline, different chief analysts have given completely opposite opinions.

Guotai Haitong Strategy Chief Fang: The main reason is that the second-generation solvency regulation requirements for insurance companies will be fully implemented in 2026, with March 31st being the first assessment. Small and medium insurance companies face significant solvency pressure. The first-quarter assessment for insurance companies ended on March 31st, and the pressure is mainly in these past two days and early next week. At this level, further declines are not appropriate.

However, Dongwu Securities Non-Banking Chief Sun offers a completely different view:

The rumored new solvency policy has not yet been implemented. Previously, some transitional policies of the second-generation two-phase system have ended, but the third phase of the second-generation system based on new accounting standards is still in testing and has not been implemented, so it will not impact insurance capital behavior.
Some small and medium-sized companies are indeed reducing their holdings, which is normal. The overall impact on insurance capital is very small. The insurance industry is highly concentrated, with leading large companies holding most of the investment assets, and their operations and investment behaviors are stable. Currently, some small and medium-sized companies are reducing holdings due to solvency pressure, but this is normal industry behavior, and their proportion in overall funds is very low, making it unlikely to significantly affect the stock market.
The industry’s overall liability-side incremental capital is large, and insurance capital’s increased holdings outweigh reductions. In 2025, the insurance industry’s investment assets increased by 5 trillion yuan. Since 2026, under the “deposit relocation” background, new insurance premiums have shown impressive growth, resulting in a substantial increase in new premium scale and sufficient new capital supply. We expect insurance capital’s increased holdings to surpass reductions, and this is not the main reason for the market decline.

P.S.: One says the 331 solvency regulation issue and the full implementation of the second-generation system are due to the heavy solvency pressure on small and medium insurance companies; another says the transition period of the second-generation two-phase system will end, and the third phase has not been implemented yet. Indeed, some small and medium insurance companies face solvency pressure and are reducing holdings, but the overall proportion is very small and the impact is minimal. The two opinions are completely opposite, starting from inconsistent basic conditions—one says it’s implemented, the other says it’s not. Can we get a research report or a model-based quantitative analysis?

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