Insurance Premiums Soar in China, Boosting Shares in Hong Kong


Asian markets headed higher on Wednesday. In Hong Kong, the Hang Seng climbed 1.5% to 12,126 and in China the Shanghai Composite Index advanced 0.6% to 2,821. Japan's Nikkei 225 Index was virtually unchanged at 10,513.

Insurance premiums were the buzz at the Hong Kong Stock Exchange today as investors placed bets on insurance firms after reports that premiums may have risen 33% in 2010 and are expected to continue the trend. According to China's insurance regulator, total insurance premiums hit $22.7 billion last year, says China Daily, with the insurance sector's total assets reaching 5 trillion yuan ($757 billion) and profits exceeding 60 billion yuan ($9 billion). There were major increases in property premiums, presumably to ensure all those luxurious homes sprouting up across the country, but increases in life insurance were nearly as high.

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In Hong Kong, China Life Insurance and Ping An both shot up 1.9%. China Pacific Insurance Group rocketed up 5.1% after news broke that private equity firm Carlyle Group had sold $1.8 billion in shares. According to Bloomberg, Carlyle is exiting from the investment after five years, taking advantage of the end of a lock-up period, which expired on Dec. 23rd. Investors are taking home a handsome sixfold profit with Carlyle saying they had made "enough money."

Bets on cargo companies also paid off today, thanks to positive recommendations from Citigroup. China Cosco climbed 7.6%, Cosco Pacific rallied 6.1% and China Shipping Development racked up a 3.5% gain.

Further increases in the price of crude sent oil companies higher. PetroChina jumped 1.9% and Cnooc, Hong Kong's largest offshore exploration firm, leaped 1.6%. According to China Securities Journal, PetroChina has joined forces with the UK's Ineos Group -- giving it a foothold in the European market. Coal-based energy companies also gained with China Coal advancing 2.1% and China Shenhua adding 0.6%.

Other big winners included China's promising Internet companies, both listed on the Hong Kong exchange. Tencent, one of Goldman Sachs's pet projects, ramped up 3.8% and China Unicom, which provides Internet services, gained 1.8%.

Chinese airline operators rose in Shanghai. China Southern Airlines said it expects profits to increase 15-fold in 2010, sending shares 3% higher in today's trading. Other airlines also gained with Air China jumping 2.5%, Hainan Airlines zooming up 1.8% and China Eastern Airlines advancing 1.2%.

In Japan, banks propped up the market. The Governor of the Bank of Japan, Masaaki Shirakawa, was elected Vice-Chairman of the Bank for International Settlements in Basel earlier this week, and investors have high hopes that the appointment will help the industry avoid further regulation. Mitsubisihi UFJ motored up 3.6%. Mizuho Financial soared 3% and Sumitomo Mitsui Financial surged 2.7%

Other big winners in Japan included chemical manufacturer Ube Industries, which high-jumped 6.2% on rumors that it's about to report annual operating profits of about $480. Mitsubishi Estate, was also among the gainers, with its shares climbing 3.5%. Shares in the real estate company are up more than 20% since its low in July. A definite sign that markets there are heading in the right direction.