Reports in the Chinese press state, quite confidently, that local insurance group Ping An is on the brink of investing 100bn yuan (£7bn) in Britain’s Prudential. According to Reuters, The 21st Century Business Herald newspaper said the Chinese insurer would take a “non-controlling” stake in its British counterpart – and since the Pru is currently capitalised at just over £14bn, 100bn yuan would certainly buy a big lump of non-control.
There is circumstantial support for the story: Ping An, in which HSBC has a 16.8 per cent stake, has just unveiled plans to raise about £8bn through an issue of new equity in Shanghai, alongside £3bn of new convertible bonds.
It said last week that the money would be used for acquisitions that are “significantly beneficial to the group’s expansion strategies and operation efficiencies” and “compatible” with its insurance, banking and asset management activities.
Hence a ten per cent spike in the Pru’s share price at the opening in London.
But that gain was quickly halved on Wednesday – traders have clearly noticed that 21st Century Business Herald is the Chinese newspaper that brought us Baosteel’s alleged £60bn counterbid for Rio Tinto before Christmas.
In other words, it might not be true.