(Yicai) Aug. 16 -- Chinese insurance institutions, which manage CNY30 trillion (USD4.19 trillion) of assets, will go on prioritising investment in bonds in the second half of the year, as most remain cautious about mainland stocks, according to the findings of an industry survey.

More than 54 percent of the 80 insurance companies and half of the 36 insurance asset management firms polled by the Insurance Asset Management Association of China said bonds are their preferred investment target in the second half of the year.

Bank deposits are favored by more than 20 percent of the insurance firms and 14 percent of the insurance asset managers, while only about 8 percent of them will invest in stocks, the survey showed.

Forty-six percent of insurance firms and 42 percent of insurance asset managers said they are bullish on China’s bond market this half, while 46 percent and 50 percent, respectively, have a  neutral stance. This indicates a near equal split between those that are optimistic and those that are neutral, while only a few are pessimistic.

The rates of return for risk-free investments will likely fluctuate, and those for medium- and high-risk investments will probably decline or narrow, the institutions predicted.

Just 22 percent of the insurance asset managers and 24 percent of the insurers expressed optimism for the mainland stock market this half, expecting major stock indexes to fluctuate upward.

Meanwhile, over 69 percent of insurance asset managers and 59 percent of insurance companies said they remain neutral about the stock market’s direction this half. They predicted the Shanghai Composite Index will likely fluctuate between 2,800 and 3,300 points.

The index [SHA: 000001] closed at 2,879 today. In the first half of the year, it fell 0.3 percent, after moving between 3,174 and 2,635.

Editors: Tang Shihua, Futura Costaglione