JPMorgan has issued a research report stating that AIA (01299) shares experienced a significant correction yesterday (the 4th) due to market concerns over some Hong Kong banks suspending account openings for mainland clients. However, the bank believes the market is currently over-discounting the risks to the growth prospects of the Hong Kong Mainland Customer Visitor (MCV) segment, and there are no specific new regulatory policies targeting MCV sales activities at present.

JPMorgan maintains its "Overweight" rating on AIA with a target price of HK$112. The bank argues that while the Hong Kong MCV business remains relevant, valuation analysis indicates that Hong Kong clients contribute only a small portion of AIA's future growth value.

The bank anticipates that several upcoming catalysts will help rebuild market confidence. These include AIA's strong upcoming first-half results, official commentary on MCV regulation expected in August, a recovery in monthly premiums from Thailand, and positive momentum from upward revisions to New Business Value (NBV) forecasts for mainland Chinese insurers in the first half. Consequently, it advises investors to accumulate the shares on price weakness.

JPMorgan points out that the market appears to be pricing in more severe risks, such as restrictions on mainland clients opening accounts in Hong Kong. However, risks to the Hong Kong business have a limited impact on its target price. In its detailed target price valuation, mainland future growth contributes HK$18, ASEAN and other markets (including India) contribute HK$19, while Hong Kong contributes only HK$14. Even if the embedded future growth expectation for Hong Kong were halved, the adjustment to the target price would be only 6%.

The bank believes that if the share price corrects further to below 1.0 times the expected Price-to-Embedded Value (P/EV) (i.e., HK$72.5), investors will re-evaluate the stock. JPMorgan forecasts that AIA's New Business Value will grow year-on-year by 13%, 19%, and 17% in the 2026 to 2028 fiscal years, respectively.