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Prudential under pressure amid Asian fears
Prudential (PRU) £14.13
Loss to date: -9.7%
Original entry point: Buy at £15.64, 4 April 2019
Global insurance business Prudential (PRU) has had a tough time in recent weeks. Its large exposure to Asian markets is a key attraction but that has also contributed to the volatility seen in the shares as Sino-US trade war fears spook investors and tensions escalate in Hong Kong.
The response to the company’s first half results (14 Aug) was fairly downbeat too. This seemed a touch harsh given the strength of the numbers which saw a 14% increase in profit. Plans to demerge its UK operations from its Asian business are also on track for the fourth quarter of 2019.
Subsequent to the results announcement, the transfer of £12bn of annuities from Prudential to Rothesay Life was blocked by the High Court in London (16 Aug), which looks like a blow to the demerger plans, although the company stresses these are unaffected by the news. For our part we remain optimistic on the long-term prospects for Prudential.
Despite the turbulence we believe investors should stay in the course. Moving closer to the demerger should focus attention on the value and potential of both entities.