Ping An Insurance (Group) Co. (2318) shares rose the most in nine months, leading Chinese insurers higher, after HSBC Holdings Plc (HSBA) said it will sell its entire stake for $9.4 billion to a Thai company, removing investor uncertainty.
Ping An, China’s second-largest insurer, advanced 4.9 percent to close at HK$60.50, the most since March 8 and above the price HSBC agreed to sell the shares. The stock was the most actively traded in the Hang Seng Index (HSI) today by value and had the steepest gain among its members, with nearly HK$17.9 billion ($2.3 billion) worth of shares changing hands.
“The announcement of the sale of the entire stake removed some overhang concern on Ping An’s share price,” Arjan van Veen, a Hong Kong-based analyst at Credit Suisse Group AG, said.
The HSBC (5) deal, expectation of Chinese government policies in support of the stock market and relaxation of industry investment rules spurred gains in other Chinese insurers, with New China Life Insurance Co. surging nearly 10 percent on the Shanghai stock exchange, its biggest gain since June 13. China Life Insurance Co., the nation’s biggest insurance company, added 4.2 percent in Hong Kong trading. China Pacific Insurance (Group) Co. jumped 5.6 percent in Shanghai, its biggest gain since June.
HSBC, Europe’s biggest bank by market value, is selling the 15.6 percent stake at the equivalent of HK$59 a share to Thailand’s Charoen Pokphand Group Co., it said in an e-mailed statement today. The price is higher than Ping An’s closing price of HK$57.65 in Hong Kong yesterday.
Ping An will continue to explore cooperation opportunities with HSBC that are mutually beneficial, the insurer said in an e-mailed statement. It respected HSBC’s decision, it added.
The Chinese insurer welcomes Charoen Pokphand as a long- term strategic investor, Sheng Ruisheng, spokesman for Ping An, said in a telephone interview today. The company will keep its existing management system, governance model and culture, he said.
“Charoen Pokphand Group fully agrees to and trusts Ping An’s strategy, culture, business model and management team, which will encourage us to be more resolute on the company’s strategy, its existing management systems, governance model and operational culture,” Sheng said. “We respect HSBC’s choice and thank them for their contributions in the past 10 years.”
Ping An Chairman Peter Ma has overseen the expansion of Ping An into the world’s third-largest insurer by market value, as well as banking, securities and money management operations, since he founded the company in the southern Chinese city of Shenzhen 24 years ago.
The company’s new business value, which gauges the estimated profit from new policies sold, may grow a “strong” 13 percent in the second half of this year as agent sales shift back to long-term risk-protection products, improving from a 9 percent drop in the first half, Barclays Plc said in a report e- mailed Nov. 14.
Founded in 1988 as China’s first joint-stock insurer, Ping An has grown into the nation’s second-biggest insurance company, with 74 million clients, more than 175,000 employees, and about 500,000 agents.
“HSBC helped Ping An to improve its corporate governance and risk management systems and provided its rich experience and technical support, assisting Ping An as it quickly grew into a world-class financial group company,” said Sheng. “HSBC and Ping An will continue to explore various cooperation opportunities and deepen the reciprocal cooperative relationship in different areas.”
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