OCBC / Great Eastern

OCBC / Great Eastern: Morgan Stanley believes SE Asian bank captive life assurers are undervalued, and provide a useful hedge as they tend to outperform in a rising interest rate environment. Life assurance will be one of the future drivers of growth, especially in more developed markets such as Singapore or Msia. However only OCBC has a significant captive and is the best way to play life assurance in SE Asia. MS believes that Great Eastern (not covered) trades like a bank. If it were valued closer to listed peers, it could add $1.74 per share (17%) to OCBC’s share price. The house upgrades OCBC to Overweight, lifts TP to $12.02.