Known as the "sharpshooter" of the stock market, the social security fund's every move is closely watched by the market. As the semi-annual reports of listed companies are disclosed in a dense manner, the social security fund's heavy holdings and changes in shareholdings in the second quarter of 2024 have come to light.

According to statistics from Tonghuashun, as of August 28, the social security fund appeared among the top ten circulating shareholders of 451 listed companies. In the second quarter, the social security fund newly entered the top ten circulating shareholders sequence for 89 individual stocks and increased its holdings in 144 stocks. In terms of industry, by the end of the first half of the year, the social security fund's holdings in basic chemical industry, pharmaceutical and biological industry, and non-bank financial institutions were at the forefront, with holding values reaching 16.74 billion yuan, 12.58 billion yuan, and 12.41 billion yuan, respectively. Among them, the largest heavy holding in the basic chemical industry was Huaren Hengsheng, with a holding value of 3.55 billion yuan; the largest heavy holding in the pharmaceutical and biological industry was Xingqi Eye Medicine, with a holding value of 1.32 billion yuan; and the largest heavy holding in non-bank financial institutions was Founder Securities, with a holding value of 8.42 billion yuan.

Preferential Treatment for Securities Firm Stocks

Data from Tonghuashun shows that by the end of the first half of the year, the social security fund held a total of 9.97 billion shares in the aforementioned 451 listed companies, with a holding value of up to 137.81 billion yuan.

Looking at the ranking of holding values, among the stocks that have disclosed their semi-annual reports, two of the top ten companies in terms of social security fund holdings are from the securities sector. The stock with the highest holding value is Founder Securities, with the social security fund holding 1.09 billion shares in the second quarter, valued at 8.42 billion yuan.

Advertisement

The second stock in terms of holding value also comes from the securities sector, which is Guoxin Securities. The National Council for Social Security Fund holds 457 million shares of this stock, with a holding value of 3.97 billion yuan, accounting for 4.75% of the circulating shares. The social security fund's holding value in Changshu Bank reached 2.195 billion yuan, ranking fourth.

Among the top ten heavy holdings, China Mobile is a new entry for the social security fund in the second quarter. By the end of the first half of the year, the social security fund's holding value in China Mobile temporarily ranks tenth, with the National Social Security Fund 101 Portfolio holding a total of 14.7128 million shares of the stock, with a holding value of 1.58 billion yuan, accounting for 1.94%, and ranking as the tenth largest circulating shareholder. China Mobile announced on August 8 that its net profit for the first half of the year was 80.2 billion yuan, a year-on-year increase of 5.3%.

Hou Bin, head of the Industrial Finance Research Institute and TMT Research Center at Great Wall Securities, said that in the first half of this year, China Mobile still maintained steady growth in performance despite facing a complex external environment and many difficulties. Affected by the relatively large pressure in the mobile terminal business, the overall revenue and profit were slightly lower than expected, but the overall profitability indicators are gradually improving. The company has made good technological progress in the fields of cloud, artificial intelligence, and big data through strengthening R&D investment, and the commercialization is also accelerating. The company's industrial digitalization layout has shown effective results.

From the perspective of industry sector holdings, Tonghuashun data shows that among the 451 stocks heavily held by the social security fund, by the end of the first half of 2024, according to the first-level industry classification of Shenwan, the social security fund's holdings in basic chemical industry, pharmaceutical and biological industry, and non-bank financial institutions were at the forefront, with holding values reaching 16.74 billion yuan, 12.58 billion yuan, and 12.41 billion yuan, respectively.

Looking at the ranking of holding values of the social security fund, according to Tonghuashun data statistics, the National Council for Social Security Fund, the National Social Security Fund 103 Portfolio, and the National Social Security Fund 114 Portfolio temporarily rank first, second, and third in terms of holding values, with holdings of 12.39 billion yuan, 9.45 billion yuan, and 9.22 billion yuan, respectively.It is worth noting that among the individual stocks held by the social security fund, a higher proportion of companies have seen year-on-year growth in net profits in the mid-year report of 2024. Statistics show that at least more than 300 companies have achieved year-on-year growth in net profits in the first half of the year.

Consistent annualized returns exceeding 7% for 23 years

The social security fund has always been a "sharpshooter" in the investment world, with a steady investment style, and has been hailed as "smart money." From 2001 to 2023, over a period of 23 years, the social security fund's average annual investment return rate has exceeded 7%, and its scale has achieved leapfrog growth, "trouncing" a host of professional investment institutions and becoming the "YYDS" in the investment world.

Looking at the social security fund's holdings structure in the past two years, its approach mainly focuses on a "two-pronged" strategy. First, industries with absolute low valuations where pessimistic performance expectations have been fully reflected, and where performance is expected to rebound, such as the banking, consumer, and pharmaceutical sectors, which are mainly used as a base position. Second, industries that are currently in a high-growth cycle and are strongly supported by national policies, with a long-term growth logic, such as new energy vehicles, photovoltaics, and semiconductors.

Recently, Ding Xuedong, the Party Secretary of the National Council for Social Security Fund, wrote in the "Study Times" that it is necessary to actively integrate into the national strategy and to do a great job in combining technology finance and pension finance. Ding Xuedong stated that as an important participant in the capital market and a typical long-term and patient capital, it is necessary to continue to increase investment in the domestic capital market, to increase long-term equity investment in strategic and basic areas related to the lifeline of the national economy and people's livelihood, and to increase investment in scientific and technological innovation and new quality productivity. While ensuring the safety and preservation and appreciation of the fund, it also helps to maintain the stable and healthy development of the capital market and supports the construction of a modern industrial system and the development of the real economy.

In the second quarter, the social security fund also reduced its holdings in some stocks, with 122 individual stocks being reduced, including Sailun Tyre, Starlight Shares, and Feilihua, among others. Looking at the trend of these stocks, it may be due to profit-taking. "Value investment is not about holding on, but pursuing an absolute cost-effectiveness. If the short-term increase is significant and the good news is realized, it is necessary to take profits. If the value is always in a low area, it can be continuously bought," said a private equity person in charge in South China to the reporter.

Although the social security fund's investment returns are excellent, ordinary investors cannot completely "copy homework." Bu Yili, a wealth researcher at Paipai Network, suggests a rational view of the social security holdings. First, the social security returns come from the investment portfolio, not a single stock. The social security holdings are relatively dispersed, and they invest in a basket of stock portfolios, with a single stock having a very small impact on the overall returns of social security. Second, the investment style of the social security fund is not suitable for all investors. The social security fund has a long investment cycle and tends to buy companies that can continuously create value at a reasonable price for long-term holding. It does not care about the stock price fluctuations during the period unless there are significant changes in the company's fundamentals. Third, the news of the social security fund's holdings has a certain lag, so it is impossible to keep completely synchronized with the social security fund. However, it cannot be denied that the social security fund has strong pricing and research capabilities in the A-share market, and the vast majority of its holdings are companies with excellent fundamental quality.