Hong Kong-listed Chinese insurers draw record Southbound inflows

Monthly net Southbound inflows into insurers reached $1.8b in July.

Hong Kong-listed Chinese insurers have seen a sharp rise in Southbound investor inflows this year, though the link to share price performance remains weaker than in banks, according to CGS International Securities.

Monthly net Southbound inflows into insurers reached $1.8b (HK$13.9b) in July and $2.0b (HK$15.3b) in August, 2.8 to 3.2 standard deviations above the post-June 2023 average of $0.5b (HK$3.5b). In September, inflows were estimated at $1.3b (HK$9.8b).

Despite this surge, the correlation between inflows and insurer share price outperformance against the MSCI China Index was only 12% since June 2024, compared with 73% for banks.

Ping An Insurance has been the main driver of these flows, accounting for 97% of China Life’s net Southbound inflows and 203% of CPIC’s between their first and last substantial shareholder filings.

The insurer now holds 16% to 19% of several Hong Kong-listed Chinese banks and has been increasing its stakes in insurers and telecom companies.

CGS International retains an overweight rating on China’s insurance sector, citing stronger new business value growth expected in 2025–2026, helped by margin gains after cuts to guaranteed rates at the end of August.

Key risks highlighted include policyholder funds shifting from insurance savings products to equities, and challenges in growing the agent force.

($1.00 = HK$7.78)