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AIA shares fall after some HK insurance purchases barred
[HONG KONG] AIA Group Ltd shares slumped after China UnionPay Co halted credit and debt card payments for most insurance policies in Hong Kong, as regulators are cracking down on capital outflows from China.
The stock declined 6.8 per cent in Hong Kong on Monday, the biggest intra-day decline since Feb 3. UnionPay will suspend the use of its cards to pay for all Hong Kong insurance except for accidents, medical coverage and tourism, Bloomberg News reported on Friday.
About half of sales by AIA's Hong Kong unit were generated from Chinese visitors, AIA Chief Executive Officer Mark Tucker said in July.
Sales of insurance to Chinese visitors in Hong Kong have surged since Aug 2015, when a surprise devaluation of the country's currency, the first since 1994, stoked fears of a further weakening and led citizens to move money offshore.
China has been progressively tightening rules governing Hong Kong insurance sales to mainland residents as part of its attempts to curb capital outflows.
Still, Chinese visitors bought a record HK$16.9 billion (S$3.06 billion) of insurance and related investment policies in the three months through June, according to numbers released by the Office of the Commissioner of Insurance in Hong Kong.
Chinese people have been flocking to Hong Kong to buy insurance policies, which typically come with better service than on the mainland and also offer them a way to skirt controls on how much capital they can move abroad.
Chinese buyers had used multiple swiping of credit cards as a way of moving money overseas through the purchase of insurance policies. Restrictions on their use by those living on the mainland were introduced this year to curb the practice.