Heng An Standard Life Asia is introducing 12 new cash dividend investment choices and 2 new fund houses, offering the most choices in the market*

Heng An Standard Life (Asia) Limited (“HASL Asia”, or “the Company”) believes the chances of a soft landing of the US economy have increased as the Federal Reserve officially enters a rate cut cycle, says the insurer’s Q4 2024 economic outlook. As market expectations for further rate cuts rise, capitals are flowing into certain emerging markets, reversing the trend of developed economies outperforming their developing counterparts since the beginning of the year. 

In response to the latest monetary policies from the US and China, HASL Asia has introduced 12 new cash dividend distribution investment choices within its investment-linked assurance scheme (ILAS). This increases the total number of investment choices to over 310. The Company has also partnered with two new fund houses, making HASL Asia the insurer with the most investment choices in Hong Kong's ILAS market and the widest range of fund houses in the city*.

The Federal Reserve, responding to a slowdown in US inflation over the past two months and recognising the signs of a weakening job market, decided to cut interest rates by 50 basis points at its September meeting. The Fed assessed that economic conditions remain relatively stable and resilient. It now forecasts the unemployment rate will rise in 2024 but will begin to decline from 2026, while inflation will continue its downward trend, decreasing from 2.6% in June to the latest estimate of 2.3%.

The implications of an economic soft landing or a recession would have significantly different effects on the monetary policy, making it essential to closely monitor economic data. There remains some internal disagreement within the Federal Reserve regarding the pace of rate cuts. According to the dot plot of the Federal Reserve, the median interest rate for 2024 is set at 4.375%, suggesting there is still room for further cuts of 50 basis points. Yet, based on the voting results of all the 19 Fed officials at its September meeting, two officials expected rates holding steady through the remainder of the year while 17 officials predicted further easing in 2024, in which seven officials estimated just one more cut, nine officials expected two additional cuts and one official predicted three cuts. 

Harriet Zhang, Chief Investment Officer of HASL Asia, said, “In China, economic data for August indicates that domestic demand remains weak. However, the People's Bank of China has issued a rare announcement suggesting that it will back a moderate rebound in prices. Beginning late September, the Chinese government started implementing a series of stimulus policies, including adjustments to the deposit reserve requirement ratio, interest rate cuts, reductions in the interest rates on existing individual housing loans, lower down payment requirements, and the introduction of new monetary policy tools to support the stock market. These measures aim to stabilise economic growth, property prices, and the stock market. We anticipate the introduction of further incremental policies to strengthen macroeconomic fundamentals.”

The impact of an ageing population is becoming increasingly evident, with China passing its first proposal to delay the statutory retirement age since 1978. Over a 15-year period, the retirement age for male workers will be raised from 60 to 63, while the maximum retirement age for female workers will be extended to 58. In the long term, this adjustment will help alleviate the effects of a shrinking working-age population and ease the pressures on the pension system.

In terms of asset allocation, valuations for A-shares and Hong Kong stocks have receded and are now at historical lows. Although initial market expectations were weak, recent policy stimuli have led to a rapid increase, restoring positive market sentiment. The sustainability of this upward trend will depend on the joint impact of fiscal and monetary policies. Presently, the absolute yield levels in bonds offer attractive allocation opportunities. With the Federal Reserve entering a rate cut cycle, there are reasons to be optimistic about short-term rates, while long-term rates may still fluctuate. It is advisable to consider low-priced allocations and actively capture trading opportunities for additional capital gains.

As the insurer offering the most investment choices in Hong Kong's ILAS market*, HASL Asia continues to enrich customer experience and comprehensively meet client needs. The Company has introduced 12 new cash dividend distribution investment choices under its ILAS, covering various categories such as Asia-Pacific Equity, Asia Allocation, USD Moderate Allocation, Asia Bond, USD Government Bond and HKD Bond. This brings the total number of choices to over 310, including 70 cash dividend distribution investment choices, maintaining its industry leadership*. The Company has also added two new fund companies as partners – China Asset Management (Hong Kong) Limited and Taikang Asset Management (Hong Kong) Company Limited – increasing its number of partner fund companies to 28, making it the insurer with the most fund houses in Hong Kong*.

_{*Compared to the data from existing insurance companies that offer ILAS products in the Hong Kong market, as of 21 October 2024.}