China restricting sales of overseas insurance to mainlanders
In an effort to slow the flow of capital out of the country, China’s government is moving to restrict the ability of mainland Chinese to buy insurance from non-Chinese insurance companies, causing shares in insurance companies active in the Hong Kong market to slump.
Concerns were triggered after UnionPay, a popular mainland credit card provider, announced that it would cap overseas insurance product purchases at US$5,000 from Thursday, the South Morning China Post and other media organisations reported today. The “offshoring” of insurance is said to be one way mainland Chinese have been using to discreetly move their Chinese yuan savings into non-yuan offshore assets.
The news caused the price of shares in such insurance giants as AIA Group, Manulife and Prudential to fall, pulling the sector down by 3.46% on Wednesday in Hong Kong and making it that market’s biggest losing sector for the day, according to the SCMP.
“AIA, the largest insurer in Hong Kong, fell more than 8% at one stage before trimming the loss to close 4.88%,” the SCMP added.
The move was seen as the latest in a series of measures China is implementing in an effort to slow the flow of money out of the country, as it attempts to stabilise China’s economy and its beleaguered financial markets.