Xiaomo: Mainland taxes on overseas insurance policy income have limited impact on the fundamentals of HSBC Holdings (00005) and Standard Chartered Group (02888)

The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that Caixin reported cases where mainland residents were taxed on offshore insurance policy returns. Although reports indicate that enforcement has not been unified across the country, and enforcement by local tax authorities is inconsistent, relevant headlines have raised concerns in the market about bank insurance revenues that may be adversely affected.

The bank estimates that in the first half of 2026, mainland visitors (MCV) insurance income accounted for about 1% of the revenue of HSBC Holdings (00005) and about 0.7% of Standard Chartered Group (02888). Even if the scope of enforcement is expanded, Hong Kong insurance products are still considered competitive compared to mainland alternatives. Therefore, it is expected that the impact on FX Control and Standard Chartered's fundamental earnings will be limited, but the news may drag down short-term sentiment and stock prices.

The bank indicates that any weakness that arises as a result may provide an opportunity for absorption, and reaffirms the “plus” ratings for FX Control and Standard Chartered. The target prices are HK$200 and HK$310, respectively. Komo favors Standard Chartered because Standard Chartered's earnings per share are growing strongly, the return on equity expansion trajectory is more clear, and the valuation is still reasonable.