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2026-08-07 15:52:38 Chinese authorities have reportedly started levying a 20% personal income tax on offshore insurance policies, covering dividend distributions and interest generated from prepaid premiums, Jefferies published a research report stating. On the news, PRU (02378.HK)'s London-listed shares once plunged 13% intraday on Wednesday (5th), before narrowing the slump to 6% at the close. Shares of AIA (01299.HK) also came under pressure yesterday (6th), with losses once reaching 8% in early trading before closing down 6%. The broker said it immediately communicated with multiple insurers and investors after the news. The vast majority of investors viewed PRU's sharp intraday downfall as a buying opportunity, while only a small number believed the news would damage the industry's cost of equity in the long run. In Jefferies' view, imposing a 20% tax on policy returns would reduce consumer value. For savings policies, it was expected to partially narrow the gap between low yields in Mainland China and relatively higher yields in Hong Kong, slightly undermining the marginal attractiveness of such policies and potentially exerting pressure on sales volumes. However, the broker underscored that consumers purchase insurance not only for return value, but also for purposes such as investment diversification. It added that the market had for years worried Mainland China could ban cross-border insurance purchases, leading to zero sales and affecting existing policies. Now that authorities have explicitly taxed such policies, it effectively recognizes the legality of such insurance purchases. Therefore, Jefferies remained upbeat on AIA and PRU, maintaining a Buy rating on AIA with a TP of HKD111. ~ AASTOCKS Financial News Website: www.aastocks.com | |