(Bloomberg) -- The prolonged slide in shares of AIA Group Ltd. stands at odds with the street’s unanimous bullish recommendation and has now diverted the stock from its usual course of tracking the Chinese equity market.

Concerns over slowing growth in the world’s second largest economy and Beijing’s capital controls have erased more than $100 billion from the Hong Kong insurer’s market valuation since early 2021. The options market signals more pain ahead, with the stock’s volatility skew at the highest level in two months, an indication of increased demand for downside protection. 

“The company’s growth thesis has lost some appeal to global long-only investors,” said Shuyan Feng, deputy general manager, investment management at Huatai Asset Management. “The lack of clarity with its buybacks going forward and its deteriorating new business margin also hurt sentiment.”

The selloff in AIA has gathered momentum since its 2023 earnings report last month showed a negative impact from a rise in medical claims after the pandemic. The insurer’s stock is now down 30% on the year even as the Hang Seng China Enterprises Index — with which it had previously moved in lockstep — has recovered to essentially flat.

AIA’s losses are also at odds with the 34 analysts that have buy ratings on the Hong Kong-listed stock, with zero hold or sell recommendations. The average analyst price target of HK$90.93, implies a 90% gain from Thursday’s close.

Investors fear that uncertainty in China’s economy will hamper AIA’s results as well as its ability to repurchase shares and pay dividends. A recent probe targeting unlicensed broker sales of insurance policies to mainland customers in Hong Kong has also weighed on sentiment for the sector.

The sell-side points to signs of improving fundamentals, with many analysts expecting a positive surprise in AIA’s next set of results and guidance on shareholder returns. They also seem undisturbed by the impacts of post-Covid normalization and regulatory issues.

The investigation into unlicensed broker selling will likely have a “manageable impact on AIA’s HK business, given it was part of regulatory practices targeting healthy development and sustainability of the industry,” Nomura Securities Co. analyst Shengbo Tang wrote in a note. The issue also doesn’t involve the company’s core agency business, he added.

Which direction AIA’s shares go from here carries implications for the broader Hong Kong equity market given its weight. The blue chip is the heaviest-weighted component of the MSCI Hong Kong Index, accounting for more than 25%. Bulls are looking for a rebound.

“We expect several key market concerns to alleviate moving into the summer,” JPMorgan Chase & Co. analyst MW Kim wrote in a report. First-quarter results “should confirm healthy and solid business growth and the timeline on a new shareholders’ return program,” adding that recognition of the growth potential of AIA’s India business should also boost the stock.

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