Shares of Ping An Insurance (Group) Co tumbled yesterday as institutional investors started selling previously locked-up stocks yesterday.
Ping An fell 1.53 percent to end at 70.11 yuan (US$9.87) in Shanghai yesterday, while the benchmark Shanghai Composite Index rose 2.06 percent to finish at 4,438.27.
About 3.12 billion shares of Ping An were allowed to be floated on the market. Twenty strategic investors who held 345 million shares of Ping An and 50 institutional investors which handle another 2.78 billion shares were able to unlock their shares from yesterday.
"The unlocking of the shares will not cast a big shadow on the broad market as shares of Ping An are undervalued now,'' said Wang Xiaogang, an Orient Securities Co analyst. "If the shares keep falling due to selling of the unlocked shares, it's good timing to buy them.''
Wang predicted the shares to hit 99.32 yuan by the middle of this year.
He expected seven out of the 20 strategic investors will be long-term investors of the insurer while nine out of the 50 institutional investors including fund management firms will also keep their investment long term.
Wang estimated that investors may sell 1.22 billion shares, or 39 percent of the unlocked shares, in the short term, or within one month.
Wang expects China's life insurance premiums to grow more than 30 percent this year on the back of the country's rising economy, the need for financial protection and limited investment channels.
Shenzhen-based Ping An will hold a shareholders' meeting tomorrow on its mammoth funding plan, which it announced in January, to sell up to 1.2 billion new yuan-backed A shares, or 14 percent of its expanded capital, plus 41.2 billion yuan of six-year convertible bonds with detachable warrants.
Shares of China's second-largest insurer have lost 30 percent since the fund-raising plan was made public.