Cornerstone investments are not without risk.
Under the dual pressures of low interest rates and an "asset drought," the asset allocation of insurance funds is showing new trends. This year, insurance capital has participated in Hong Kong stock IPOs at a significantly increased scale and frequency, with subscription amounts exceeding HKD 3.44 billion, roughly three times last year's figures.
Leading insurance institutions, such as Taikang Insurance and China Pacific Insurance, have emerged as important players in the Hong Kong IPO market, participating in high-profile offerings like Contemporary Amperex Technology Co. Limited
However, cornerstone investments are not guaranteed profits. The rapid iteration of technology in hard tech, market volatility during the six-month lock-up period, as well as uncertainties surrounding the Hong Kong dollar's exchange rate and interest rate environment, introduce multiple variables that complicate the asset allocation transformation for insurance funds.
Subscription Amounts Reach Three Times Last Year's Figures
Recently, Zijin Mining's subsidiary, Zijin Gold International
This instance is not isolated. According to data from Choice, as of the date of this report, at least seven Hong Kong IPOs this year have secured insurance institutions as cornerstone investors, with combined subscription amounts exceeding HKD 3.44 billion, more than three times that of the same period last year. In contrast, only four Hong Kong companies managed to obtain cornerstone investments from insurance funds last year, with total subscriptions of under HKD 1 billion.
Among various insurance companies, Taikang Insurance Group and its subsidiaries have been the most active, participating in the IPO placements of five companies, including Zijin Gold International
China Pacific and its subsidiaries also frequently appear in cornerstone investor lists, participating in the IPOs of Zijin Gold International
Additionally, Evergrande Life participated in the IPO cornerstone investment for Chery Automobile
In terms of investment focus, data indicates that this year, insurance funds as cornerstone investors have notably shifted their attention toward hard technology and new consumer sectors, encompassing industries such as automotive, digital solutions, home appliances, semiconductors, and energy storage devices. Specifically, in the cornerstone investment for Contemporary Amperex Technology, Taikang Life and China Pacific’s subsidiaries each committed HKD 388 million; meanwhile, in the Zijin Gold International IPO, the two institutions contributed HKD 468 million each.
Some insurance funds have also opted to take direct stakes in technology companies during the cornerstone investment phase. In July of this year, Taikang Life announced that it participated in Fortior's H-share IPO as a cornerstone investor, subscribing USD 25 million through an account managed by Taikang Asset in Hong Kong, corresponding to 8.69% of the total H-shares issued.
Related to Multiple Factors
Cornerstone investors, who commit to purchasing shares during a company's Hong Kong IPO, have traditionally served as a stabilizing force in the market. However, in previous years, due to a prolonged downturn in the Hong Kong market and unsatisfactory returns from cornerstone investments, participation from insurance funds was limited.
What has prompted this recent change? It may be attributed to multiple factors.
On one hand, the investment environment for insurance funds has evolved, with challenges arising from historical reliance on the "fixed income plus" model.
Sun Ting, an analyst in the non-bank financial industry at Dongwu Securities, noted that the combination of high insurance premium growth and declining interest rates has placed pressure on the asset side of insurance companies, leading to profits from interest rate spreads and asset shortages. Since 2023, traditional insurance products, particularly those tied to growing lifelong insurance, have gained popularity, driving rapid growth in industry premiums and creating substantial asset allocation demand. As domestic long-end interest rates continue to decline, the pressure from interest rate spreads and "asset drought" necessitates the search for appropriate allocation assets. Additionally, under the new accounting standards, stock investments face the dilemma of balancing returns and volatility. Since 2023, listed insurance companies have begun to implement new financial instrument standards, where stock assets must choose between fair value through profit or loss (FVTPL) and fair value through other comprehensive income (FVOCI). "Currently, publicly listed insurance companies mainly use FVTPL for stock investments, where stock market fluctuations significantly impact current net profits. Allocating for long-term equity investments or high-dividend strategies could help mitigate this issue."
On the other hand, the booming primary market for Hong Kong stocks has provided numerous investment opportunities.
This year, the number of stocks available for IPOs in Hong Kong has increased, showcasing notable profit potential. According to the latest report from KPMG, the funds raised from Hong Kong IPOs in the first three quarters of 2025 reached HKD 182.9 billion, leading the globe. As of September 30, 2025, there are 289 listing applications under review, excluding confidential submissions, setting a new record for ongoing applications. In terms of investment returns, data from Choice shows that among the 68 newly listed stocks in Hong Kong IPOs in the first three quarters of 2025, 48 saw a rise on their first day, 4 remained unchanged, while 16 declined, yielding a first-day price decline rate of 24%, the lowest since 2017.
Facing Certain Risks
It is noteworthy that while insurance funds significantly increase their participation in cornerstone investments for Hong Kong IPOs, which opens up new pathways to enhance returns, this strategy is also fraught with risks.
Insiders from various insurance institutions have revealed that many companies are continuously assessing the potential risks associated with being cornerstone investors. They analyzed that hard technology enterprises generally exhibit three characteristics: "high growth potential, high technical risk, and high market uncertainty." The pace of technological iterations often resembles Moore's Law, presenting challenges for insurance organizations' existing research and investment systems to adapt to rapidly evolving frontier fields.
Furthermore, the insiders pointed out that insurance funds face several types of risks when engaging in cornerstone investments for Hong Kong IPOs: firstly, market volatility risk, as stock prices may drop due to changes in market sentiment; secondly, liquidity risk, since cornerstone investments usually have a lock-up period of around six months, and if the secondary market continues to fall during this time, investors cannot exit, leading to potentially uncontrolled losses. Additionally, rising Hong Kong dollar interest rates, exchange rate fluctuations, and cross-border settlement frictions could erode the actual investment returns expressed in Hong Kong dollars.
Real data reflects these risks. According to Choice statistics, among the seven Hong Kong companies that received cornerstone investments from insurance funds, two saw their stocks fall below the issue price on the first day of trading. Considering a three-month observation period, of the five companies meeting the criteria, two also experienced stock price declines. Specifically, Hesai Technology
Beyond these issues, insurance funds also need to manage the challenges of matching the duration of assets and liabilities during their participation process. Delays in the listing progress of projects, insufficient execution of mechanisms for allotment, or unexercised oversubscription rights can lead to mismatches in the duration structure between assets and liabilities, further intensifying the asset-liability management pressures faced by insurance funds.