Stock Talk

Market Close: Insurers drag down Hang Seng; Ping An slumps

PUBLISHED : Tuesday, 08 January, 2013, 5:02pm
UPDATED : Tuesday, 08 January, 2013, 7:13pm

Hang Seng fell for a second day on Tuesday, led by Chinese insurers, as investors flocked to take profit from sectors on speculation those shares have been overbought.

Yet sentiment remained robust as trading volume amounted to HK$82.8 billion, with short selling ratio falling to 6.6 per cent, the lowest since December 18. The Hong Kong benchmark on Tuesday lost 218.56 points, or 0.94 per cent, to finish at 23,111.19.

Investors cashed out from Chinese insurers on Tuesday, after the five major Chinese insurers, including Ping An (2318.HK), PICC Group (1339.HK), China Life (2628.HK), grew more than 17 per cent over the past month. That compared with only 5 per cent growth for the benchmark Hang Seng Index.

Investors speeded up their sell down in insurance sector, inspired by the US private-equity firm Carlyle Group which sold US$790 million (HK$6.12 billion) worth of China Pacific Insurance (2601.HK) shares on Tuesday.

The No 3 insurer in China have gained 40 per cent over the past year, compared with 24 per cent gain for the benchmark Hang Seng Index.

Citi analyst Darwin Lam said in a research report that this “cleanup trade” by Carlyle had removed overhang for the stock and the stock enjoyed a “steady and likely better-than-peers net book value growth and sector-leading solvency margin, still reasonable valuation and removal of the Carlyle overhang.”

Ping An was in the sportlight Tuesday after China Insurance Regulatory Commission was said to have rejected the US$9.4 billion bid by a Thai conglomerate to buy HSBC’s entire stake in China’s No 2 life insurer.

Hong Kong-listed shares of Ping An lost 4 per cent and closed at HK$68.15 per share. Its Shanghai-listed shares lost 3.7 per cent to finish at 45.46 yuan on Tuesday. HSBC’s share prices also fell 0.36 per cent to close at HK$82.75.