How Hong Kong can hold on to the 7% compound interest plateau when insurance rates are falling on the mainland?

In a global economy, the insurance market has been known for itsstabilitycap (a poem)Risk protection functionIt has received widespread attention.

However, the recentContinued reduction of interest rates in the Mainland insurance markettogether withRate hikes in the Hong Kong insurance marketIn stark contrast, it can be predicted that the enthusiasm for Hong Kong insurance will only increase.

#01

Mainland insurance rate cuts

According to the latest reports, some insurance companies in the MainlandWill stop selling 3%'s Increased Whole Life at the end of June, in favor of a new 2.75%. The main reason behind this realignment isReducing the cost of the insurer's liability side, mitigating the risk of carry losses faced by the industry.

The Past and Present of Carry Loss Risk

In mainland China in the 1990s, bank deposit rates were once as high as 8%-10%. The insurance industry was just starting out, and insurance companies such as Ping An and Guoshou introduced savings insurance with a predetermined interest rate of around 8%.

withcentral bank cut interest ratesWhen the one-year interest rate dropped to 1.5%, the insurance company's investment return could not reach the originally promised rate of 8%, resulting in a huge loss, which is known as "carry loss".

#02

Rate hikes in the Hong Kong insurance market

Meanwhile, the Hong Kong insurance market has shown a different picture.

thanks toPositive performance of the United States dollar and assets in overseas marketsIn addition, the long-term expected returns of various insurance companies in Hong Kong can reach 7%+, and some insurance companies are even adjusting their expected returns upwards.

Hong Kong Insurance Product Benefits Analysis

The underlying investments of Hong Kong insurance companies mainly includedebenturescap (a poem)stock (market)Two broad categories.

In recent years, yields on fixed income assets have risen, especiallyRising yields on dollar-denominated Treasuries, providing higher returns for insurance companies.

In addition, equity assets held by Hong Kong insurance companies, mainlyUS stock, and their long-term yields are quite impressive.

As can be seen from the historical chart of the representative S&P 500 index in the United States.The overall trend shows a gradual increase.

In addition, Hong Kong insurance has the following advantages:

Flexible regulatory environment

The relatively flexible insurance regulatory environment in Hong Kong has enabled Hong Kong insurance companies to quickly adapt to market changes and introduce insurance products that meet consumer needs.

Diversified investment channels

Hong Kong insurance companies can capture investment opportunities globally across currencies and countries, including overseas bonds, stocks and real estate.

Wide range of products

Hong Kong insurance companies have launched a wide range of insurance products covering various areas such as savings, investment and protection.

Strict risk control

In terms of product design, investment selection and claims handling, Hong Kong insurance companies follow strict risk control standards to ensure the sound operation of insurance funds.

Excellent capital management team

Hong Kong insurance companies have experienced capital management teams with global perspectives and in-depth professional knowledge, which are able to accurately grasp the pulse of the market and formulate scientific investment strategies.

Hong Kong's high insurance yields are mainly attributable to its status as an international financial center.low interest rateThe environment allows insurers to take a moreLow-cost investmentAt the same time, the market is highly competitivePrompting insurers to offer higher returnsto attract customers.

In addition, Hong Kong'sLow tax policy, the insurance company'sGlobal Diversification Strategyas well asStrict regulatory mechanismsIt also provides for high returns.

In the face of the downward adjustment of Mainland insurance interest rates and the upward adjustment of Hong Kong insurance interest rates, investors should make reasonable asset allocation decisions based on their own needs and the market environment. Hong Kong insurance products are recognized for theirHigh yield, low riskThe characteristics of the search forLong-term stable returnsof investors offers a good option.

If you would like to know more about Hong Kong insurance, please feel free to contact us.