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Home / Business / Hong Kong Turmoil slams AIA as mainland visitors decline

Hong Kong Turmoil slams AIA as mainland visitors decline



(Bloomberg) – More than four months of unrest in Hong Kong and the relaxing effect on Chinese tourism to the city have taken its toll on insurance company AIA Group Ltd., with sales notes in the policy.

The value of new business to its largest entity, a measure of future profitability of new policy, fell by double digits in the third quarter, the AIA said in a statement to the local stock exchange on Monday. Separately, HSBC Holdings Plc on Monday said the change in Hong Kong's economic outlook led to a $ 90 million cost, though overall performance in the city is still "resilient."

Key Insights:

While the AIA did not provide an accurate figure for the slide in Hong Kong, it said the group's value of new business was little changed in the quarter to $ 980 million. Exclusive Hong Kong increased the value of new business by 14%. The position, stocks rose with relief that growth in other markets offset the declines in Hong Kong, and the new business margin expanded. New business for Hong Kong residents actually increased. But it was wiped out by the decline in sales to mainland visitors, which "largely tracked" the decline in total visitors to the city in July and August, the company said. Chinese visitors to China are buying policies in Hong Kong as a way to move offshore capital in times of economic uncertainty and expected currency weakness. The yuan depreciated by almost 4% in the quarter. AIA made a cautious note about the outlook: "Some of our markets are experiencing headwinds from lower interest rates, falling consumer confidence and rising political and trade tensions," it states. "In particular, the reduced number of mainland Chinese visitors to Hong Kong continues to impact sales." The figures were released more than two weeks early after the AIA became aware that the information was circulating allegedly relating to a unit's financial performance. This information was "incomplete" and inaccurate, it says.

Market reaction:

AIA shares rose as much as 4.2% in Hong Kong trading on Monday, taking this year's gain to 20%. Third quarter new business value was better than expected, said Bloomberg Intelligence analyst Steven Lam, with strong sales to Hong Kong residents as encouraging. The announcement provided some clarity on the impact of Hong Kong protests on the company, the biggest question in the minds of investors, CGS-CIMB Securities Analyst Michael Chang said. Growth in markets including mainland China, Malaysia, Thailand and Singapore helped curb the fallout from Hong Kong protests, Lam said.

Get more:

For more information from AIA's announcement, click here Hong Kong Unrest Rocks Insurance Industry as Chinese buyers BalkHong Kong Insurance sales to mainland visitor plunges, HKET says Hong Kong protests flare for 21st weekend amid global turmoil [19659009] (Adds HSBC cost in first section about)

– With assistance from Dominic Lau.

To contact the reporters about this story: Peter Vercoe in Sydney at pvercoe@bloomberg.net; Bei Hu in Hong Kong at bhu5@bloomberg.net

contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Edward Johnson

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