Insurance companies in China have demonstrated their support for the domestic equity market in the second quarter of 2025 by pouring trillions of yuan into it, all with an eye to strengthening and stabilizing it at the urging of financial regulators.

In Q2, Chinese insurers poured a total of 4.73 trillion yuan ( US$663 billion ) into stocks and securities investment funds, according to the data compiled by the National Financial Regulatory Administration ( NFRA ), up a quarter from the same period in 2024.

Deepening their bet on the equity market, life insurers expanded the equity portfolio by almost half in Q2 compared with the same period last year, rising to approximately 3 trillion yuan; as well, property insurers boosted their equity allocation by 43% to 196 billion yuan. The share of equity investment by both types of insurers, NFRA data show, edged up beyond 8%.

As a key equity investor, Chinese insurers have been called upon by regulators since 2024 to increase their holdings to prop up a market battered by steep declines over the last couple of years. Regulators, aiming to drive long-term capital inflow, have eased some investment limitations for these capital providers, such as raising the cap for equity investment by 5% for qualified insurers with an established capital ratio, alongside a 5% reduction on capital charges for all equity investments.

Heeding the request, Chinese insurance companies are doubling down on the equity investment strategy. Private equity vehicles backed by the NFRA and launched this year under pilot programmes for long-term stock investments have exceeded 110 billion yuan, compared with 50 billion yuan in 2024. A new batch of funds totalling 60 billion, according to the NFRA, is on the horizon.

The funds will be managed by top insurance companies, including China Pacific Life Insurance, Taikang Life Insurance and Sunshine Life Insurance, with the goal of stabilizing the market.

While Chinese insurance companies are committed to the equity market, worries around capital adequacy and liquidity remain, with the share of bank reserves for life and property insurers easing back during Q2.

Despite solid profitability, continuous capital injection can strain liquidity. The existing cap on equity investments imposed on insurers will also serve a potential barrier to a stock market recovery in the future.

“Some life insurers already hold large equity investments, and there is limited room for increasing this portion even with policy encouragement,” Fitch Ratings states. “We think that insurers’ capital buffers will continue to be under pressure as the companies try to sustain business growth, while their financial performance may be more volatile over the long term given the potential increase in equity assets.”