Prudential reports stagnant growth in Hong Kong and China

Unlock Editor’s Digest for free

FT editor Roula Khalaf selects her favorite stories in this weekly newsletter.

Prudential’s growth stagnated in its key markets of Hong Kong and mainland China in the first half of the year, confounding the life insurer’s recently upbeat outlook for the region.

New business profit, a measure of expected earnings from newly sold products, fell 3 percent year-on-year in Hong Kong, its biggest market, in the six months to the end of June to $651 million. The drop comes after the company posted a strong 218% growth in the same period last year as visitors from mainland China returned to Hong Kong after the pandemic.

Prudential’s mainland China joint venture posted a 33 percent drop in new business profit, despite the insurer’s chief executive, Anil Wadhwani, saying in March it was “starting to see the momentum coming back” in China.

Prudential, which is domiciled in the UK and jointly listed in London and Hong Kong, shed its US and European operations to focus on Asia and Africa in a sweeping restructuring that was completed in late 2021. With however, it was then hit by zero-Covid policies in Hong Kong’s main market, which turned off visitors from mainland China.

On Wednesday, it reported that the group’s new business profit fell to $1.47 billion in the first half of the year from $1.49 billion a year earlier, weighed down by weakness in China and Hong Kong.

The insurer said it “has taken steps . . . to reposition our business” in anticipation of “macroeconomic headwinds” in China, while Hong Kong was expected to continue to see “sustained growth” from mainland Chinese visitors.

The insurer added that overall weak growth in mainland China and concerns about its property sector continued to put pressure on Chinese interest rates, which could also “hit the broader Asian region and the vitality of the global economy”.

Prudential has now bought back $200 million of shares as part of a $2 billion buyback plan announced in June. Adjusted operating profit for the first half rose 6% year-over-year at real exchange rates to $1.54 billion from $1.46 billion.

The company’s shares fell 3 percent in Hong Kong on Wednesday, after falling more than 22 percent since the start of the year.

Its results come after Hong Kong-based insurer AIA last week reported a rise in half-year profits and a 21% increase in overall new business, driven by strong demand in China.

The value of new business in Hong Kong, AIA’s largest market, rose 26% based on real exchange rates supported by growing Chinese visitors to the city, while mainland China saw a 30% increase in new business value business.

But a slowdown in China’s economy continues to add pressure on the growth rate for AIA, according to equity analysts at Jefferies last month, although increased demand from mainland China is expected to remain in Hong Kong.