Hong Kong/China Insurance: Key Takeaways From Shanghai Trip

Our recent visits with insurers and front-line sales suggest that banca regulatory headwinds could be temporary, while underlying demand remains solid. Sales momentum was muted in 3Q, especially in banca, due to regulatory restrictions and sales pacing after strong 1H growth. Kick-off sales have been largely front-loaded, though the high base remains a challenge, and we expect varying targets across insurers for the 2027 kick-off season. Some insurers expect banca regulatory headwinds to be less impactful than "BXHY" in late 2023, with momentum improving from July to September. Banks remain positive on insurance demand outpacing wealth AUM growth, supported by solid demand and attractive products despite expense restrictions. Weak 3Q earnings remain a key near-term focus: (1) OPAT to stay very solid across key names; (2) most insurers to report a 3Q net loss and a double-digit net profit decline in YT3Q due to market correction;