New Approach to Social Security Fund Stock Selection Revealed: Three Hot Sectors Favored, Stocks with Losses Still Held in Heavy Positions

A-shares listed companies will continue to disclose their 2025 annual reports, and the situation of social security funds heavily holding circulating shares will also be updated gradually.

According to Wind statistics on the top ten new circulating shareholders of A-shares companies that have disclosed their 2025 annual reports as of March 23, 33 companies have been newly heavily held by social security funds.

Among the newly added stocks, chemical, pharmaceutical, and machinery sectors attract high attention. Companies like Shouhua Gas, Yukang Pharmaceutical, and Shantui Co., Ltd. have single social security fund portfolios holding over 2% of circulating shares. Additionally, some companies that reported losses in the same year, such as Yukang Pharmaceutical, Dazhihui, and Capital Online, have also been newly acquired by some social security fund portfolios.

Concentrated holdings and preferences for midstream manufacturing, pharmaceuticals, and other industries

Specifically, based on the disclosed 2025 annual report data, the new positions taken by social security funds show increased concentration and a preference for midstream manufacturing and pharmaceutical industries.

Wind statistics show that as of March 23, the latest disclosed top ten circulating shareholders of 33 listed companies newly invested by social security funds. Chemical, pharmaceutical, machinery, and certain electronic sub-sectors have become key areas for social security fund deployment.

For example, companies like AVIC High-Tech, Tianhua New Energy, Shantui Co., Yukang Pharmaceutical, and Xuguang Electronics are typical of midstream manufacturing or tech growth sectors. Industry analysts believe these targets often have stable industry chain positions, with both cyclical profitability and growth potential, aligning with the long-term allocation preferences of social security funds.

In terms of scale, some stocks have received high proportions of concentrated holdings from social security funds—single fund portfolios often hold tens of millions of shares, with some holdings valued at billions of yuan. For instance, the Social Security Fund 406 Portfolio’s new holding in Shantui Co., Ltd. was valued at 355 million yuan at the end of last year; the Social Security Fund 601 Portfolio’s holding in Shenhuo Co., Ltd. was valued at 468 million yuan; and the Social Security Fund 106 Portfolio’s holding in Shanjin International reached 485 million yuan.

Furthermore, companies like Shouhua Gas, Yukang Pharmaceutical, and Shantui Co., Ltd. rank high in new holdings proportion by social security funds. For example, Shouhua Gas, held by the 404 Portfolio, owned 7.9 million shares at the end of 2025, accounting for 2.72% of circulating shares.

Besides social security fund portfolios, multiple pension insurance fund portfolios frequently appear on the new investment list, with some holdings reaching significant scales. Companies like Xinnuowei, Hongqiao Holdings, and Yukang Pharmaceutical are among the top holdings of related portfolios. Analysts point out that pension funds entering the market now tend to coordinate with social security funds, with long-term capital continuously increasing their positions in A-shares.

Top targets by social security funds for new holdings in A-shares (as of March 23, 2026) Data source: Wind

Companies with losses are still being targeted Social security funds also engage in counter-cyclical and value-based strategies

A notable phenomenon in this round of new holdings by social security funds is that some companies with losses in 2025 are still being heavily accumulated by these funds. For example, Yukang Pharmaceutical, Capital Online, and Dazhihui reported negative net profits in their 2025 annual reports.

Moreover, some companies’ stock prices and market values declined in Q4 of last year. Capital Online fell 3.79% in Q4, and Dazhihui dropped 20.46%. Of course, the investment logic of social security funds may not be solely performance-driven but also involves counter-cyclical deployment and valuation recovery considerations.

Previously, social security funds have also “bought more as prices fell” in some stocks. For instance, Shenzhen Gas was one of the targets of “buy more as prices fell,” and companies like Yilian Network, Pengding Holdings, and Wanhua Chemical experienced long-term price corrections, yet social security funds increased their positions against the trend. Over time, the valuation recovery of these stocks has brought considerable returns.

Industry insiders believe that as long-term investors, social security funds focus more on the long-term profitability of enterprises rather than short-term performance. Some companies’ short-term losses are often due to industry cycle fluctuations, increased R&D investment, or one-time factors, and their fundamentals may not have fundamentally deteriorated.

For example, in the pharmaceutical industry, recent increases in R&D investment have put short-term profits under pressure, but from the perspective of demographic structure and medical demand, the industry’s long-term growth logic remains clear. In the first half of 2025, the biopharmaceutical sector also experienced a sustained valuation recovery.

Some institutional investors say that changes in social security fund holdings serve as a strong “weather vane,” but their investment logic is more long-term and prudent, not entirely suitable for short-term trading strategies. Individual investors can pay attention to their continued deployment in midstream manufacturing, pharmaceuticals, and tech growth sectors, but should also make independent judgments based on company fundamentals to avoid blindly following.

(Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Please verify before acting. Use at your own risk.)

Reporter | Ren Fei

Editor | Duan Lian, Xiao Ruidong, Du Hengfeng

Proofreader | He Xiaotao

Cover photo: Liu Guomei

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