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Social security funds and pension funds, known for their "patient capital," have always been a focus for investors. As the semi-annual reports of listed companies are disclosed, their investment trends are gradually coming to light.

First Financial Daily reporters, after combing through the materials, found that in the second quarter, these long-term funds favored resource and energy stocks, significantly increasing their holdings in companies such as Xinji Energy (601918.SH), Yuanxing Energy (000683.SZ), Weixing Chemical (002648.SZ), and Western Mining (601168.SH).

Moreover, for targets with varying performance like Yuanxing Energy and Guoci Materials (300285.SZ), social security funds also made significant increases in their holdings in the second quarter. Analysts believe that social security and pension funds place more emphasis on the medium and long-term returns of listed companies, rather than focusing on short-term fluctuations in stock prices.

Significant Purchases in Companies like Xinji Energy

In the second quarter, social security funds made significant purchases of resource and energy stocks.

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As of the end of the quarter, the most frequently appearing stock in the known holdings of social security fund portfolios was Xinji Energy. Data shows that the 406, 504, and 420 portfolios under the social security fund entered and became the fifth, eighth, and tenth largest circulating shareholders of the company at the end of the second quarter, with a total holding of 84.9852 million shares, accounting for 3.28% of its circulating shares.

Public information indicates that Xinji Energy is involved in two industries: coal and electricity, and is a company whose main business includes coal mining, coal washing, and thermal power generation.

Similar to the significant increase in Xinji Energy, the social security fund also became the tenth largest circulating shareholder of Weixing Chemical in the second quarter. As of the end of the quarter, the 101 portfolio of the social security fund held 16.5529 million shares of the stock, accounting for 0.49% of its circulating shares.

Weixing Chemical is a stock in the "chemical raw materials" sector, an integrated light hydrocarbon industry chain production enterprise, promoting the comprehensive utilization of carbon dioxide and hydrogen, with application fields covering industries such as aerospace and automotive.

Yuanxing Energy, Western Mining, and Gansu Energy (000791.SZ) are also three resource stocks that are heavily held by social security funds.In the second quarter, the Social Security Fund's 115 and 420 portfolios collectively increased their holdings in Western Mining by 6.1434 million shares, bringing their total holdings to 47.2928 million shares by the end of the quarter.

By the end of the second quarter, the Social Security Fund's 113 portfolio held 57.463 million shares of Yuanxing Energy, with no changes in holdings during the quarter; in addition to the Social Security Fund, the pension fund also showed optimism for the stock, with the Basic Pension Insurance Fund's 802 portfolio newly entering as the seventh-largest circulating shareholder of the company, holding 42.8214 million shares by the end of the quarter.

The Social Security Fund's 1105 portfolio newly entered as the tenth-largest circulating shareholder of Gansu Energy, with holdings of 3.5187 million shares by the end of the quarter.

Apart from the aforementioned resource and energy stocks, outdoor advertising service provider Focus Media (002027.SZ), telecommunications operator China Mobile (600941.SH), and white goods company TCL Smart Home (002668.SZ) were also heavily invested in, but there was no situation where multiple stocks in the same sector were significantly increased by the Social Security Fund.

Similar to the Social Security Fund, the pension fund also showed optimism for resource and energy stocks in the second quarter.

In addition to significantly increasing its holdings in Yuanxing Energy, Huafeng Aluminum (601702.SH) saw an increase of 1.4038 million shares by the pension fund in the second quarter.

Long-term investment rather than focusing on short-term stock price fluctuations

The long-term capital's optimism and increase in holdings may be related to the strong performance of resource and energy stocks in the first half of the year.

In the first half of the year, the A-share market was generally volatile and differentiated, with a clear structural market trend. Amid the differentiation of market indices, the resource cycle sector performed prominently, driving the related "periodic table of elements" investment to become very popular. Wind data shows that as of June 30, the coal, petroleum and petrochemical, and non-ferrous metals sectors were among the few industries in the SWS first-level industry classification to achieve positive returns within the year, with the coal industry's first-half increase reaching 11.96%.

The strong performance of the resource cycle sector has attracted many institutional funds to compete for layout. According to the data from the first-quarter report of public mutual funds in 2024, in terms of changes in the proportion of market value of holdings, the upstream resource sectors represented by non-ferrous metals and petroleum and petrochemicals were significantly increased in the heavy holdings of public mutual funds. Among them, the proportion of market value of holdings in the energy and materials sector increased by 3.5 percentage points, to 17.4%.Looking back at the performance of the resource cycle sector in the first half of the year, it mostly showed a pattern of rising first and then retracing. Before May, influenced by the global manufacturing recovery, the demand for energy and chemical commodities led by crude oil continued to expand, lifting commodity prices. Excess profits from the upstream mining end also provided support for costs. Starting in late May, various metals began to accumulate inventory, and the market became concerned about downstream demand, leading to a retracement and gradual stabilization of the prices of various metals.

A research report from Haitong Securities believes that the strength of this round of resource products reflects three major logics in the market: First, the recovery of global manufacturing stimulates expectations for demand improvement; second, the previous dovish stance of the Federal Reserve has triggered a market "front-running" trade in interest rate cuts; third, there are changes in the supply and demand patterns of some commodities themselves.

First Financial Daily reporters combed through materials and found that most resource stocks heavily held by social security and pension funds have seen significant increases in their stock prices this year.

Taking Xinji Energy as an example, as of August 9th, the stock price has risen by as much as 99.28% this year. In addition, the stock price of Western Mining has also increased by 50.98% this year.

However, it is worth noting that not all resource stocks heavily held by social security and pension funds have seen a continuous rise in their stock prices this year.

For instance, Huifeng Aluminum, a stock heavily held by pension funds, has seen a drop of 11.2% in its stock price this year. After reaching a high of 21.15 yuan on May 10th, the stock price has continued to decline, closing at 15.94 yuan as of August 9th, a drop of 24.63% from the mid-year high.

The pension fund's 1204 and 16011 portfolios only entered the top ten circulating shareholders of Huifeng Aluminum in the second quarter, with a holding price of about 19.30 yuan, and may currently face a certain degree of unrealized loss.

Similarly, Guocera Materials, which is also heavily held by pension funds and currently faces a certain degree of unrealized loss, has seen a drop of 25.52% in its stock price this year.

A securities analyst told First Financial Daily reporters that the social security fund is a reserve fund for social security, with a long duration and large scale of funds. This characteristic determines that the investment style of the social security fund is mainly long-term value investment, and it does not focus on short-term stock price performance. The pension fund also adheres to long-term investment and long-term evaluation.

In terms of investment style, the asset allocation of the above two types of long-term funds is based on the basic idea of long-term investment and value investment, and they increase or decrease their positions when the market deviates significantly from the value center at a certain stage. Essentially, mean reversion is the core idea of the social security fund's asset allocation.