Morgan Stanley: Regulatory pressure on Hong Kong and mainland insurance industries may be a short-term phenomenon, underlying demand remains strong.

Morgan Stanley released a research report stating that recent exchanges with insurance companies and frontline sales channels show that regulatory pressure on bancassurance in Hong Kong and the mainland may only be 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. The bank mentioned 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 sales were mainly concentrated in the earlier period. The bank expects insurers' sales targets for the 2027 early-year sales campaign to vary. The bank mentioned 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 insurance companies prefer high-dividend stocks, while new asset-liability management rules may further guide investment behavior.