Changes in Hong Kong stocks | Prudential (02378) fell more than 5%, Citi indicates that the market overreacted to reports of personal tax levies on overseas insurance policies, and structural demand for Hong Kong insurance remains stable

The Zhitong Finance App learned that Prudential (02378) fell by more than 5%. As of press release, it was down 5.72% to HK$107.2, with a turnover of HK$16.95 million.

According to the news, Citi released a research report stating that Prudential's stock price fell significantly, mainly triggered by Caixin's report that mainland China is expanding the tax network for overseas insurance through the Common Reporting Standard (CRS). Citi believes that the market is overreacting to this. Although reports appear that the central government intends to tighten supervision to close “long-term loopholes,” the text admits that the relevant tax cases are sporadic and non-national, and some can be traced back to 2025, which is not a recent new regulation. The current sell-off is dominated by fear and excessive, and structural demand for insurance in Hong Kong remains stable.

Citi said that the root cause of the incident was the long-term definition of policy dividends in the “Income from Interest, Dividends, and Dividends” section of the Personal Income Tax Act. Local tax authorities are currently using this provision to levy a 20% tax rate on dividend income from overseas insurance policies, but this practice is extremely controversial in terms of law. In fact, the dividends from insurance policies in mainland China are still clearly exempt from tax in practice. The bank pointed out that regulatory uncertainty will continue to overshadow Hong Kong's insurance industry, but the structural needs of Hong Kong insurance have not changed. Its advantages include offshore asset allocation, multi-currency flexibility, access to global medical services, and superior product design.