Prudential braces for significant H1 2024 market headwinds

The group expects a 32.1% margin.

Jefferies Equity Research identified how Prudential poses a distinctive challenge to investors due to market sensitivity.

Although, with a $2b buyback in line, the shares are trading at super discounted multiple, and a less challenging comparative period for growth to be assessed against in the second half of the year.

“In our view, Prudential poses a unique challenge to investors in terms of market sensitivity. On the one hand, by virtue of Health & Protection dominating the group's business mix, the cash flows and capital generation is reassuringly insensitive to financial markets,” the research note said.

Health & Protection business margins are challenged by rising discount rates across Asia, particularly in Hong Kong and Singapore. Regulatory reforms in Indonesia and shifts in Bancassurance sales in Malaysia, Taiwan, and Thailand are also impacting margins.

Eastspring's weak flows and expected outflows to M&G Plc signal a need for further investment.

Prudential's first half of 2024 results are anticipated to face significant market headwinds, especially from falling yields in China impacting its Savings products. 

The group expects a 32.1% margin, with overall headwinds of nearly 10%.