According to JPMorgan's estimate, a 100 basis point change in interest rates will lead to AIA's 2023 fiscal year pre-tax profit and shareholder equity sensitivity reaching 7% and 1%.
According to the report released by JPMorgan on the Zhitong Finance and Economics APP, AIA has been given a "shareholding" rating, with the view that AIA seems to be undervalued. The company is a major beneficiary of the US interest rate cuts and the weakness of the US dollar, as its assets and liabilities are heavily exposed to the dollar (including the Hong Kong dollar).
The bank estimates that a 100 basis point change in interest rates will lead to AIA's 2023 fiscal year pre-tax profit and shareholder equity sensitivity reaching 7% and 1%. In addition, based on the information disclosed by AIA, a 5% devaluation of the dollar (i.e. appreciation of the local currency) means that the sensitivity of embedded value (EV) and new business value (NBV) is 2% and 3.5% respectively.
