Morgan Stanley: Insurance Industry Regulatory Pressure May Be Short-Term; Bullish on Mainland China and Hong Kong Insurance Demand

Morgan Stanley released a research report stating that recent exchanges with insurance companies and frontline sales channels in Hong Kong and the mainland indicate that regulatory pressure on bancassurance may be only a short-term phenomenon, while underlying demand remains strong. Third-quarter earnings outlook and investment behavior are key areas of near-term focus, and large insurance companies are expected to continue expanding market share in 2027. Morgan Stanley pointed out that third-quarter sales momentum was weak, especially in the bancassurance segment, mainly due to regulatory restrictions and a slowdown in sales pace after strong growth in the first half. Despite the high base, early-year "good start" sales were mainly concentrated in the early period. The bank expects insurers' sales targets for the 2027 "good start" period to vary. Morgan Stanley said that despite commission restrictions, banks remain optimistic that insurance demand growth will outpace the growth rate of wealth management assets under management, supported by strong demand and attractive products. On the asset side, given market volatility, some insurers prefer high-dividend stocks, while new asset-liability management rules may further guide investment behavior.