Shares of Aviva plc (LON: AV) have crashed on Wednesday morning, after the firm announced plans to sell off its Hong Kong division.
Shares of Aviva crashed 3.92% to 401p. 20/11/19 11:19BST.
On Monday, the FTSE100 (INDEXFTSE: UKX) listed firm announced that it was determined to turn its slump in Chinese and Singapore operations around.
After Bloomberg reported that rival companies MS&AD Insurance Group (TYO: 8725) and Manulife Financial Corp (TSE: MFC) had submitted bids, it seemed that Aviva were determined to make Singapore operations work.
CEO Maurice Tulloch announced plans to overhaul overseas and Asian operations, however the optimism that was sparked on Monday seems to have fallen through.
Hong Kong is currently in political and economic turmoil, with violence and protests flooding global news headlines. The economy has collapsed into recession and the ability to trade for multinational firms has been hindered by heightened political tensions with China.
The insurance firm said it will simply its business structure into five operating divisions and sell its stake in the Hong Kong business to co-investor Hillhouse Capital.
“I am committed to running Aviva better,” said Tulloch ahead of a presentation to investors on Wednesday.
“We will be more commercially focussed, manage costs rigorously and be more disciplined in how we invest,” he added.
Additionally, Aviva set targets for the next three years. The highlights being a 12% return on equity, a £300 million net cost saving and an aim to generate a cash flow between £8.5 billion and £9.5 billion.
However, shareholders can be appeased a the firm alluded to operating profit staying in line with management expectations.
Aviva have a lot to consider about their Asian operations, as they still hold investment in Vietnam and Indonesia.
In tough market conditions, competitors such as Lloyd’s (LON: LLOY) have seen a slump in their third quarter profits which shows that the slumps may not be entirely the fault of Aviva.
