Prudential Growth Miss Is An Equity, Not Credit, Event

Prudential equity worst-performing amongst Euro insurers (PRU LN) but credit holding steady, per our view earlier. HSBC and StanChart are slightly underperforming the senior index with AIA flat in a wider sub index, but all moves are within 1-2bp. So, this growth disappointment feels an equity event rather than anything threatening spreads, outside of bank credit.

• Prudential results this morning saw net profit expectations missed and a big drop-off in growth in some key markets (China, Vietnam) though recovery continued in HK. That hit to growth expectations is seeing the equity meaningfully lower so far today.
• Our view earlier was that capital generation and surplus remained relatively good and that’s perhaps a reason that Pru’s cash curve (GBP and USD) is largely unchanged today.
• For EuroIG issuers, HSBC (+2 and StanChart are (slightly) underperforming vs. senior index (+2-3bp vs. +1bp) whereas AIA is flat (in sub world) against index up 1bp. So, generally quite muted – today certainly feels like more of an equity disappointment than anything.