Betting on a potential presidential election driven rally and cheap valuations, Citigroup Global Markets said it retains a positive view on the financial sector.
"With the presidential election coming up in nine months' time ... we think that sentiment would turn positive in light of [the presidential candidates'] promises of banking reforms and further opening up to China," although implementation of these promises were usually a disappointment after the elections, Bradford Ti (鄭溫煌), an analyst at Citigroup Global Markets, said in a report released on Friday.
An analysis of 13 large-cap domestic financial stocks showed that elections provided a boost to stocks in 2004, with share prices prior to the elections in March 2004 rising an average of 20 percent from December 2003 and 54 percent from July 2003, Ti said.
The financial sector's rise led the benchmark TAIEX's rally to a near seven-year high of 8,573.64 last Friday. The financial sub-index posted a 2.8 percent increase, outpacing the index's 1.45 percent rise that day.
Foreign institutional investors bought a net of nearly NT$23 billion (US$694 million), mainly in insurance and securities stocks, including Polaris Securities Co (寶來證券), SinoPac Holdings (永豐金控), Fuhwa Financial Holding Co (復華金控) and Cathay Financial Holding Co (國泰金控).
Life insurance stocks were steady performers, while securities brokerage stocks moved up later in the cycle, Ti said.
While many investors remain skeptical about banking stocks' performance, Citigroup reiterated its rising interest in Taiwanese financial stocks, citing "overly low valuations" and betting on a cyclical recovery providing support to valuations and better politics driving sentiment into the second half of this year.
The US equity research house recommended Fuhwa Financial, which owns the nation's largest brokerage; Cathay Financial, which operates the nation's biggest life insurer; and SinoPac, with its securities arm and aggressive move to expand overseas.
Meanwhile, Nomura Securities Co said it preferred insurance plays over banking stocks after the Legislative Yuan last week approved a measure to raise the cap on overseas investment by 10 percentage points to 45 percent of an insurance company's working capital.
The relaxation will benefit the insurance industry, the Japanese brokerage said.
The lifting of the investment limit translates into an additional NT$700 billion in capital that can be invested in overseas markets, which offer higher potential returns than the home market, it said.
The insurance sector as a whole is expected to see an additional investment return of NT$160 billion to NT$240 billion, Nomura said.
The Japanese brokerage recommended large-cap insurance companies such as Cathay Financial and Shin Kong Financial Holding Co (
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
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
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