Contents
The danger is not over 3
#1 Financials MOU: near-term real impact could be limited 3
#2 Investment yield key to profitability 3
#3 Sector consolidation and capital raising 3
Investment view 4
Financials MOU: near-term real impact could be limited 5
Investment yield and FX rate key to profitability 8
Negative spread book the key drag on earnings in medium term 8
Interest rate outlook the key driver 8
Exchange rate movements can affect earnings significantly 10
Sector consolidation and capital raising 12
Sector consolidation likely to continue 12
Transition to international solvency standards could trigger capital raising across
sector in long term 15
Finding a fair risk-reward price 16
Investment yield assumptions the key risk 16
Evaluating the value of risk-adjusted life 17
Valuation screens 18
Sector investment assets and mix 21
Latest company views
Cathay Financial Holdings 22
Shin Kong Financial Holding 37