China Life Insurance's shares plummeted yesterday because of disappointing half-year results and uncertain prospects for the mainland's insurance industry in the second half.
The company's shares closed down 11.55 per cent, or HK$2.65, to HK$20.30 and were the second most actively traded on the Hong Kong stock exchange yesterday. Ping An, another mainland insurance company, was the most traded stock as its shares fell 3.6 per cent.
Vice-president Liu Jiade said during an interim results briefing that the company would continue to look at the possibility of selling subordinated debt in Hong Kong to take advantage of lower costs.
China Life recently announced plans to sell up to 30 billion yuan (HK$36.6 billion) of subordinated bonds to help boost its solvency ratio to around 204 per cent, up about 40 percentage points compared to the end of June.
Liu said China Life's move to raise funds was just part of a larger industry effort, as Chinese insurance companies have raised a total of about 100 billion yuan and banks have raised about 500 billion yuan this year.
On Tuesday, the world's largest life insurer by market value posted a bigger-than-expected 28.1 per cent drop in net profit of 12.96 billion yuan compared with the same time last year. Revenue rose 5.6 per cent to 227.5 billion yuan.
Yuan Li, the company's new chairman, said that besides a volatile macro environment, China Life needed to make certain 'adjustments', though he was vague on what that might entail.