AIA drops 8.2% as China moves to tax Hong Kong policy returns
Why it matters: A 20% tax on some offshore insurance gains could curb mainland demand that has powered Hong Kong insurers and banks.
Hong Kong-listed insurers fell sharply Thursday after Caixin reported that mainland Chinese tax authorities in Beijing and Hangzhou have begun collecting personal income tax on income from Hong Kong insurance policies. The report said returns including dividend payouts and interest on prepaid premiums face a 20% tax rate.
AIA slid 8.2%, Prudential lost more than 5% and FWD Group fell 4.5%, helping pull the Hang Seng Index down more than 2% in early trading. HSBC fell 2.2% and Standard Chartered dropped 1%.
Analysts said the move would make offshore insurance products less attractive to mainland buyers, a key customer base for Hong Kong insurers, wealth managers and banks. Hong Kong policies have been popular with Chinese customers seeking dollar-based savings and investment products and broader protection than mainland offerings.