Abstract
As anticipated, Q408 GDP data confirmed that China is far from immune from the
unfolding global
recession, with real growth dropping to 6.8% year-on-year
(y-o-y). This marked the weakest outturn in
seven years and dragged
full-year growth to 9.0%, a sharp decline from the 13.0% recorded in 2007
and
the first time since 2002 it had failed to register double-digit
headline growth. With things expected to get
worse before they get better,
we are anticipating further grim news from China in H109, and reiterate
our
below-consensus 5.6% growth forecast for the year.
Indeed, trade
data for December revealed that both imports and exports suffered a second
consecutive
month of contraction, with exports falling by 2.8% y-o-y,
accelerating from the 2.2% decline recorded in
November, while imports
plummeted by 21.3% y-o-y having dropped by 17.9% in the previous month.
Notably, Exports to the US (which purchased 17.7% of China' s total exports in
2008) fell by 4.1% y-o-y
in December to compound November' s 6.1% decline,
while shipments to the EU (which, with a 20.5%
share, was China' s single
biggest export destination in 2008) fell 3.5% y-o-y in December after
remaining
flat in the previous month.
We have recently revised down
our 2009 growth forecasts for both the US and the EU - from -2.0% and
-1.6% to -2.3% and -2.5%, respectively - implying that export growth is likely
to remain in negative
territory (or at least remain very weak) over the
near term. Meanwhile, imports are likely to follow suit as
commodity
prices continue to trend lower, demand for inputs for manufacturing exports
decline and
domestic demand remains sluggish.
In the Asia Pacific, we
profile 23 companies. These are AEGON, AIG, Allianz, Aviva, AXA, Cardif,
Fortis, Generali, Groupama, HDI-Gerling, HSBC Insurance, ING Group, Liberty
Mutual,
Manulife, MetLife, Prudential Financial, Prudential, QBE, RSA, Sun
Life Financial, The Hartford,
Principal Financial Group and Zurich
Financial Services.
Over the course of 2008, actual total premiums in
China rose by 25% to CNY978,409mn. Non-life
premiums rose by 26% to
CNY312,572mn, while life premiums rose by 24% to CNY665,837mn.
Between now
and the end of the forecast period, we expect that annual non-life premiums
will rise by
CNY132,767mn, while annual life premiums should rise by
CNY147,275mn.
Growth in non-life premiums should be driven by the general
growth in nominal GDP: we are assuming
that non-life penetration remains
constant at the current level of around 1.20%.
Growth in life premiums
should be driven by the change in the overall population and a rise in life
density
from US$45.93 to US$100 per capita.
BMI' s Insurance Business
Environment Rating is 62.3.
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