Q: Happy Saturday 5i researchers,
With rates peaking and might be cutting next year, bank shares seem responding favourable. What about insurance sectors? Do you see tailwind for insurance sectors as well, or they are different from banks? Thanks.
With rates peaking and might be cutting next year, bank shares seem responding favourable. What about insurance sectors? Do you see tailwind for insurance sectors as well, or they are different from banks? Thanks.
5i Research Answer:
Insurance companies typically do better, financial, in times of rising rates. This is because their surplus cash earns more. But, they also pay dividends, and their stocks were hit fairly hard regardless when rates rose. So, we would still expect some tailwinds for the sector as investor re-value solid dividends from both insurers AND banks.