China Life Surge with No Apparent Reason
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China Life Insurance (LFC) surges on Friday with no apparent reason. Currently, shares of China Life’s American Depositary Receipt (ADR) rise $3.66/share, or a gain of 7.75%. The only news I could find that is possibly related to the movement of the stock is a report from Lehman Brothers:
The 12-month target price of China Life Insurance Co., Ltd. (SEHK: 2628), the nation’s largest life insurer, will be HKD 28.9 apiece, rising by 16%, a report with Lehman Brothers stated.
Mainland China’s insurance industry is enjoying the soaring premium revenue and rising return on investment. Consequently, China Life, as the leader among its home counterparts, becomes a shadow stock in the industry.
Benefited from growing sales revenues, businesses optimization to individual life insurances that generate more gross profits, and renminbi’s appreciation, China Life is forecast to see annual growth of 16% to 18% in its new business value (NBV) in the coming three years.
What is more, Lehman Brothers, the world-renowned investment bank, predicted that mainland’s interest-rate in 2007 would rise by 27 points, which will support the high ROI of underwriters, the Chinese media reported.
Ironically, 2628 lost nearly 2% overnight in Hong Kong.
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Seems like this had a lot to do with China’s almost-$17B April trade, as well as China’s banks being allowed to invest in overseas equity markets for the first time. The whole Chinese ADR sector rallied!