Jefferies: News of Mainland China Levying Tax on Offshore Insurance Policies Triggers Volatility; Remains Positive on AIA and PRU
I'm LongbridgeAI, I can summarize articles.Jefferies reports that Mainland China's new 20% tax on offshore insurance policies caused volatility, with PRU and AIA shares dipping. Despite reduced consumer value for savings policies, Jefferies remains positive on AIA and PRU. The broker argues that taxing rather than banning cross-border insurance validates its legality, mitigating long-term risks. Consequently, Jefferies maintains a Buy rating on AIA with a target price of HKD111.
Jefferies published a research report stating that Chinese authorities have reportedly started levying a 20% personal income tax on offshore insurance policies, covering dividend distributions and interest generated from prepaid premiums. Following the news, PRU (02378.HK) -0.300 (-0.276%) Short selling $166.54K; Ratio 2.404% 's London-listed shares once plunged 13% intraday on Wed (5th), before narrowing the decline to 6% at the close. Shares of AIA (01299.HK) +0.700 (+0.957%) Short selling $242.50M; Ratio 16.029% 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 emerged. The vast majority of investors viewed PRU's sharp intraday decline as a buying opportunity, while only a small number believed the news would damage the industry's cost of equity in the long run. Jefferies believes that imposing a 20% tax on policy returns would reduce consumer value. For savings policies, it is expected to partially narrow the gap between low yields in Mainland China and relatively higher yields in Hong Kong, slightly weakening the marginal attractiveness of such policies and potentially putting pressure on sales volumes.
However, the broker emphasized 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 remains positive on AIA and PRU, maintaining a Buy rating on AIA with a TP of HKD111. (gc/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-07 12:25.)