Ping An rises on HSBC stake sale to Charoen Pokphand

PUBLISHED : Wednesday, 05 December, 2012, 11:39am
UPDATED : Wednesday, 05 December, 2012, 11:39am

Ping An Insurance (Group) Co. shares rose the most in eight months, leading Chinese insurers higher, after HSBC Holdings said it will sell its entire stake for US$9.4 billion to a Thai company, removing investor uncertainty. Ping An, China’s second-largest insurer, advanced 4 per cent to HK$59.95 in mid morning trade, the most since April 13.

The stock was the fourth-biggest contributor to the 0.7 percent advance in the Hang Seng Index and had the third-biggest gain in the benchmark. The insurer’s shares were the most actively traded on the benchmark in terms of volume and value, with 261.79 million shares worth HK$15.45 billion ($2 billion) changing hands so far today.

“The announcement of the sale of the entire stake removed some overhang concern on Ping An’s share price,” Arjan van Veen, a Hong Kong-based analyst at Credit Suisse Group AG, said.

The HSBC deal spurred gains in other Chinese insurers, with New China Life Insurance Co. surging 9 per cent on the Shanghai stock exchange, its biggest gain since June. China Life Insurance Co., the nation’s biggest insurance company, added 2.5 per cent in Hong Kong trading. China Pacific Insurance (Group) Co. jumped 5.2 per cent in Shanghai, its biggest gain since June.

HSBC, Europe’s biggest bank by market value, said it was selling the 15.6 per cent stake at HK$59 a share to Thailand’s Charoen Pokphand Group Co. The price is higher than Ping An’s closing price of HK$57.65 in Hong Kong on Tuesday.

The Chinese insurer welcomes Charoen Pokphand as a long- term strategic investor, Sheng Ruisheng, spokesman for Ping An, said on Wednesday. The company will keep its existing management system, governance model and culture, he said.

“Charoen Pokphand Group fully agrees to and trusts Ping An’s strategy, culture, business model and management team, which will encourage us to be more resolute on the company’s strategy, its existing management systems, governance model and operational culture,” Sheng said. “We respect HSBC’s choice and thank them for their contributions in the past 10 years.”

Ping An Chairman Peter Ma has overseen the expansion of Ping An into the world’s third-largest insurer by market value, as well as banking, securities and money management operations, since he founded the company in the southern Chinese city of Shenzhen 24 years ago.

The company’s new business value, which gauges the estimated profit from new policies sold, may grow a “strong” 13 per cent in the second half of this year as agent sales shift back to long-term risk-protection products, improving from a 9 per cent drop in the first half, Barclays said in a report e- mailed November. 14.

Founded in 1988 as China’s first joint-stock insurer, Ping An has grown into the nation’s second-biggest insurance company, with 74 million clients, more than 175,000 employees, and about 500,000 agents.