Despite the continuing problem of non-performing consumer loans, finance stocks are expected to bottom out in the third quarter and rebound as the bad loans cycle peaks by the end of this year, Lehman Brothers said yesterday.
The finance sub-index jumped 1.97 percent, outperforming the benchmark index's rise of 0.69 percent on the Taiwan Stock Exchange yesterday.
"While we expect Taiwan's charge-off ratio to peak in the fourth quarter of this year, the third quarter would be the time to position for a multi-quarter rally," Pandora Lee (
The rebound is expected to be driven by an attractive earnings recovery next year that could rise by close to 40 percent year-on-year on average, Lee said in the report.
The possible passage of a personal bankruptcy law may prolong the cycle, causing it to peak in the first quarter of next year, and in turn shift the ideal entry point to the fourth quarter of this year, the report said.
The forecast was made with reference to the precedent set in South Korea, as Lee noted that the South Korean banking sub-index bottomed out approximately a quarter before its peak in the second quarter of 2003.
The South Korean index was dogged by bad loans for about 18 months before appreciating by almost 200 percent.
Chinatrust Financial Holding Co (
Chinatrust Financial's profits for next year could soar by 111 percent to NT$18.53 billion (US$570.7 million), or NT$2.62 per share, up from this year's NT$8.78 billion, or NT$1.24 per share, according to Lehman Brothers' estimates.
Analysts said that Taishin Financial's profits could soar by 70 percent next year to NT$7.26 billion, or NT$1.26 per share, up from this year's NT$4.27 billion, or NT$0.74 per share.
Investors should buy Chinatrust Financial and Taishin Financial shares when they reach NT$21 and NT$15.8, respectively, Lee said.
Until then, Lee recommended investors stick with shares such as Mega Financial Holding Co (
Taiwan's consumer bad debt situation first set alarm bells ringing around the middle of last year after banks aggressively promoted high-yield, high-risk credit and cash cards for the past decade.
Chinatrust Financial reported earlier this week that it had made provision for NT$11.1 billion to cover defaulted loans in the first quarter of this year, and expected this expense to increase further during the current quarter.
Similarly, Fubon Financial Holding Co (
Overall, banks in Taiwan wrote off NT$210.8 billion in bad loans and card purchases last year, up 30 percent from 2004, according to statistics provided by the Financial Supervisory Commission.
Despite Lehman Brothers' optimism, other analysts appeared less bullish. SinoPac Securities Corp (建華金控) last month suggested that investors stay away from finance stocks due to the risks posed by the proposed personal bankruptcy law and an interest rate cap.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last