(Yicai) Dec. 6 -- Chinese insurance companies are increasingly investing in equities listed in Hong Kong rather than on the mainland this year, driven by higher dividend yields.

Since the beginning of January, two-thirds of insurers' 18 investments resulting in stakes above 5 percent have been in H-shares instead of A-shares, according to data compiled by Yicai.

Insurers are following the national strategy of channeling long-term funds into the market by investing in high-quality enterprises with stable performance and dividends, industry insiders noted, expecting this trend to continue.

Two new deals were announced this week. China Pacific Life Insurance, a subsidiary of China Taiping Insurance Holdings, purchased 996,000 shares of COSCO Shipping Energy Transportation, as reported by the Insurance Association of China. As a result, Taiping and its units now hold 5.04 percent of the oil tanker shipping company's H-shares. According to the rules, a single shareholder acquiring a stake above 5 percent in Hong Kong must disclose their holdings.

On Nov. 28, New China Life Insurance bought four million H-shares of Haitong Securities, the IAC stated yesterday. Consequently, New China Life and parties acting in concert now hold approximately 5.02 percent of the investment bank's H-shares.

Dividend Yield Premium

COSCO Shipping Energy and Haitong are also listed on the mainland, but investors chose to acquire more H-shares, most likely due to lower stock prices that result in higher dividend yields.

According to Huachuang Securities, dividend yields of H-shares can be nearly three times as high as A-shares, allowing insurers to access higher dividends.

For instance, although COSCO Shipping Energy distributed similar dividends in both markets last year, its A-share dividend yield was around 2.7 percent compared to H-shares' dividend yield of 6.15 percent, due to a lower share price in Hong Kong, based on a calculation using the Choice Model.

This year, insurers are primarily targeting high-dividend sectors such as utilities, environmental protection, banking, and industries like biopharmaceuticals and non-bank finance, which may offer potential cooperation opportunities in the future, Founder Securities noted.

Moreover, insurers are opting for equity investments over bonds to seek higher returns, as the yield on ten-year government bonds has decreased by nearly 60 basis points since the beginning of this year, the same source added.

Editor: Emmi Laine