Ping An Insurance (2318), a Hong Kong-listed mainland insurer, has seen a lot of turbulence recently. The stock dropped 16 per cent last Monday and fell 29 per cent last month.
In that time, the firm has fended off no fewer than three rumours - that HSBC, its main shareholder, is looking to sell down its stake in Ping An; that the firm has large exposure to trust loans, products that are getting increasing scrutiny from mainland regulators; and that the firm is facing multibillion-dollar losses on an investment in asset manager Fortis.
Stanley Tsai (Keefe, Bruyette & Woods Asia) says none of these rumours have proved true.
Ping An has denied that HSBC was looking to sell its stake in the insurer. Its involvement in the trust products does not involve actual money lent by the firm - it has acted as an intermediary largely between rich mainland investors and property companies. Finally, on its Fortis investment, Ping An has already largely written down most of that investment. There is little additional loss for it to realise, Tsai says.
'As far as [Ping An] knows, HSBC does not have any plan to sell down the stake ... why sell now?' asks Tsai. 'A lot of long-only investors started cutting their exposure to the [insurance] sector. People were looking for reasons to sell. It started as a rumour ... and spread.'
Edward Jen (Samsung Securities) outlines a complex picture for Ping An. He says hedge funds have traded heavily in the stock recently, contributing to its volatility. He adds that more traditional investors have been exiting Ping An on the view that it is a problem stock.
Ping An also includes a large trust company as part of its operations (Ping An Trust). This firm sold two trust products to mainland investors involving loans to the property developer Greentown, and these investments are now being scrutinised by regulators.