On August 6, AIA fell 7.4% in regular trading, trading at 71.75 HKD/share, with turnover of 10.05 billion HKD. The sharp decline was triggered by reports that Chinese tax authorities have begun imposing a 20% personal income tax on offshore insurance policy returns.

According to reports, tax lawyers and insurance industry sources indicated that Beijing and Hangzhou have already started enforcement, levying a 20% tax on Hong Kong policy returns including dividend distributions and interest generated from prepaid premiums. This move closes a long-standing regulatory loophole and is expected to weaken the attractiveness of Hong Kong insurance products relative to domestic alternatives. AIA and other financial services firms are highly dependent on mainland Chinese visitors purchasing policies in Hong Kong.

The broader Life and Health Insurance sector traded weak, with Prudential down 5.19%, China Life down 1.23%, Ping An down 1.29%, NCI down 0.98%, and China Taiping down 0.56%. This latest development follows June disruptions when some banks suspended account openings for mainland clients, and comes ahead of AIA's interim results scheduled for August 20. Investment bank Jefferies had just raised AIA's target price to HK$111 on August 5, maintaining a Buy rating.

(The above content is based on publicly available market information, generated by a program or algorithm, and is intended solely as a stock movement alert. It does not constitute investment advice or a basis for trading decisions.)