The amount of money spent by mainland Chinese tourists on life insurance in Hong Kong has suffered the worst slump on record, plunging by three quarters as the Covid-19 pandemic prevented people from travelling to the city. Mainlanders spent a total of HK$6.2 billion (US$799.96 million) on life policies in Hong Kong in the first half of the year, a 76 per cent decline from the same period a year ago, according to the Insurance Authority. They accounted for 10 per cent of the total spent. By far the most pronounced part of the decline came between April 1 and June 30, once full restrictions to contain the virus had been implemented. During that period, mainlanders spent only HK$839 million on life insurance products in the city, down 85 per cent from HK$5.4 billion in the first quarter. The Insurance Authority blamed the plunge on cross-border travel restrictions that brought tourist arrivals to a standstill . Overseas visitors needed to be quarantined for 14 days on arrival in Hong Kong, while mainlanders returning home would have had to undergo another 14 days of quarantine. Number of mainland visitors to the city dropped 90 per cent to 2.68 million in the first half, according to Hong Kong Tourism Board. Mainland tourists must buy their insurance products in person in the city, so the sharp fall in tourist numbers has hit the industry and its 100,000 salespeople hard this year. The lack of mainlanders resulted in a 34 per cent year-on-year decrease in total sales of new life policies in Hong Kong in the first six months. ‘Insurance connect’ will be next big step for Greater Bay Area Mainland Chinese have traditionally been huge spenders in Hong Kong’s insurance sector. At the peak, they bought HK$72.68 billion (US$9.4 billion) worth of insurance policies here in 2016, more than a third of all premiums collected in the city. The sales declined in recent years after China clamped down on payments for such overseas purchases to prevent capital outflow. Insurers believe the outlook remains gloomy as the pandemic is still preventing cross-border travel. “There will be no chance for any quick bounce back of mainlanders buying Hong Kong insurance policies as the pandemic has dragged on until now and there is no signs of relaxing the cross-border traffic any time soon,” said Chan Kin-por, a lawmaker for the insurance sector. “Many agents have suffered from a sharp fall of mainland buyers. The government should offer help to the salespeople to cope with their financial difficulties.” Things look very different in the personal banking sector, according to figures also released on Monday. Total deposits in Hong Kong’s banks jumped the most in more than two years in July as investors chased a flurry of big initial public offerings (IPOs) and other opportunities. Deposits held in accounts rose by HK$378.47 billion (US$48.83 billion), or 2.7 per cent, to HK$14.46 trillion at the end of July, according to monthly statistics issued by the Hong Kong Monetary Authority (HKMA). “In July, growth in deposits and loans was partly driven by initial public offering (IPO) activities,” the HKMA said in a statement. There were 24 IPOs in July, raising HK$39.34 billion during the month. It was the biggest monthly increase since April 2018 when the amount of funds raised surged by 3.2 per cent as a series of massively oversubscribed IPOs came to market. It followed a 1.6 per cent increase in June. Hong Kong, mainland stocks surrender gains amid concern about China banks The capital inflow has prompted the HKMA to intervene 38 times – including today – in the last four months, spending HK$120.22 billion of the city’s reserves to bring the exchange rate back within its trading band. The Hong Kong dollar has been pegged to the US dollar since 1983, and the HKMA is obliged to intervene when the currency moves beyond the band of 7.75 to 7.85. Some 88 firms have raised HK$132.14 billion in Hong Kong in the first seven months of this year, up 56 per cent from a year ago. That made the city the world’s second-largest destination for listings during the period.