This week, we cover news on China’s ambassador to France (Lu Shaye), Ping An Insurance, a money tip of the week, and Singapore's property taxes.
Macro in Asia
China envoy causes outrage in Europe with claims over statehood
China’s ambassador to France, Lu Shaye, caused outrage in Europe by making comments that questioned the sovereignty of Ukraine and other Eastern European countries that were former Soviet states.
China’s government had to distance itself from its ambassador’s comments, issuing a statement later that it respects the status of former Soviet member states and that Lu was expressing his “personal views”.
Why it’s happening
- Usually, casting doubt on the status of member states of the United Nations – which the likes of the Czech Republic and Lithuania are – isn’t such a great idea for a diplomat.
- Lu carried out the interview with a French broadcaster and said that “ex-Soviet Union countries” don’t have effective status under international law…who’s got their popcorn ready? 🍿
- Nothing gets nationalistic blood pumping like questioning sovereignty. Lithuania, Latvia, and Estonia summoned Chinese diplomats to their capitals to explain the remarks.
Why it matters
- Well, China’s in the middle of trying to get nations onside with its 12-point “Peace Plan” for Ukraine that it released back in late February. We all know Chinese communist officials love a good structured plan, whether it’s a 12-point or five-year one.
- Lu’s comments obviously didn’t help but President Xi Jinping did jump on a call with Ukraine President Volodymyr Zelensky, the first time the two have spoken since Russia invaded.
- Look out for how China’s government continues to repair the diplomatic damage with European nations. French President Macron was recently on a state visit to China and both China and Europe’s economies are intertwined with each other.
- There’s been a huge outcry over Lu’s comments but, if we look at his track record, we shouldn’t really be that surprised.
- That’s because he’s been one of the biggest champions of “wolf warrior diplomacy” – named after the eponymous Chinese film that took the local box office by storm back in 2017.
- Characterised by being primarily confrontational and combative, it doesn’t really seem to have done China’s image much good in the world.
In Asia specifically, 86% of those polled in Australia had a negative view of China, in Japan the number was 87% and in South Korea it was 80%. These figures were all significantly up over the past five years.
The takeaway? In an increasingly polarised world, and where the sentiment and government policies in the US are decidedly anti-China right now, it wasn’t a surprise to see the Chinese government distance itself from those comments.
Ping An Insurance posts strong first-quarter profit as China reopens
Ping An Insurance Group Co of China (SEHK: 2318), China’s largest insurer, posted a near-50% rise in Q1 2023 net profit.
Shares of Ping An’s Hong Kong-listed stock finished the week 7% higher as investors feel optimistic that China’s reopening story still has legs, with people back to buying insurance plans again.
Why’s it news?
- Insurance was a pretty hard-hit industry in China during the Covid lockdown periods. Any bright spots for companies in that sector are being celebrated.
- People in Asia like to buy life and health insurance in person (I know, I know, we live in 2023 you say) so feeling comfortable face-to-face with your insurance agent is a good sign for the Chinese economy.
Why it matters
- Pan-Asian insurance giant AIA Ltd (SEHK: 1299) also reported its first-quarter numbers this week and they painted a similarly bright picture.
- Insurance is totally a topic that puts most people to sleep but it’s also becoming an important method for Chinese people to invest and grow their wealth – via insurance savings products.
- Other large Chinese insurers will be reporting in the coming weeks so investors will be seeing if the positive trend is industry-wide.
- Ping An Insurance is known as the “techie” insurance company in China with an integrated finance and healthcare platform.
- The group has 229 million retail customers so it’s got a pretty amount of data on how they’re prioritising their insurance spend.
- New Business Value (NBV), a term for insurers’ profitable growth underwriting policies, rose 9% for Ping An in the first quarter. AIA did even better, with its equivalent up 23%.
That’s something that AIA and other pan-Asia insurers have been doing for a while.
With many Chinese insurers coming to the end of overhauling their agency forces, after years of inefficient agent growth, the sector may finally be starting to see some light at the end of the Covid tunnel.
💸 Tim’s money tip of the week
When we’re talking about investing on a regular basis, it can be hard.
No one is any good at timing market (which doesn’t stop people from trying!) but it makes total sense to just put the whole investing thing on autopilot.
By investing something each month, you take the timing element out of the whole process.
That way, it’s done and dusted and you’re not trying to figure out the sum at the end of the month after all the bills and spending are done.
By following that routine, you’ll have a better handle on your truly disposable income from month to month.
Story of the week
Singapore property taxes
We couldn’t have gone too long without another story of property-related drama in Singapore.
This time, it came from the government’s DOUBLING of the additional buyer’s stamp duty (ABSD) for foreigners to 60%, from 30% previously.
Clearly aimed at the influx of foreign buyers (many of whom are from China), many might be surprised to learn that foreign buyers only made up around 7% of purchases in the first three months of 2023 – according to early estimates.
With Singapore still very much in demand with Chinese buyers, it’s hard to see a 60% tax stemming demand all that much if the capital is there and wants to find a home in the city state.