Potential Mega losses limited
Mega International Commercial Bank Co (兆豐國際商銀) may lose less than NT$140 million (US$4.26 million) from the investment linking to the US subprime home loans, chairman Mckinney Tsai (蔡友才) said yesterday.
Four of its investment products that were held by Mega were downgraded but no loss has been incurred so far, Tsai said. If the situation worsens and the bank sells before maturity, the loss will not exceed NT$140 million, he said.
After the crisis, Mega will be more cautious about its overseas investment and mainly buy bonds, exchequer bills and company stocks, Tsai said. The products will account for 80 percent of Mega's overseas investment product mix, he said.
For the past year, Mega's deposit business has increased by 4.7 percent, lending grew by 5.2 percent and foreign exchange business jumped by 32.7 percent, Tsai said, adding that the bank will continue to cut the costs and boost business.
Hon Hai to team with HP
Hon Hai Precision Industry Co (鴻海精密), the world's largest electronics parts maker, yesterday said it will join hands with Hewlett-Packard Co (HP) to pump in US$50 million in a plant in Russia. Construction on the plant will be finished within a year, Hon Hai spokesman Edmund Ding (丁祈安) said yesterday.
Located in St Petersburg, the plant will offer proximity to Russian clientele by assembling computers, monitors and other technology products, in line with chairman Terry Gou's (郭台銘) earlier statement.
In June at a shareholder meeting, Gou said that Hon Hai will continue to expand its global strategic deployment this year by investing in Russia, Vietnam and the Czech Republic.
The expansion will make Hon Hai cope with its target to increase revenues by 30 percent from last year, driven mostly by demand for mobile phones and games consoles, Gou said at the time.
Ethylene plant closed
Formosa Petrochemical Corp (台塑石化), the nation's only publicly traded oil refiner, shut one of its three ethylene plants yesterday because of mechanical faults.
The facility, capable of making 700,000 tonnes of ethylene a year from naphtha, may remain closed for as long as 10 days for repairs to its compressor, said Lin Keh-yen (林克彥), director of the president's office.
Subprime-linked volume drops
The dollar volume of wealth management products sold by five local lenders that are linked to the US subprime mortgages has dropped to NT$1.5 billion after lenders redeemed NT$2.6 billion worth of such instruments, the Financial Supervisory Commission said yesterday.
About 2,900 investors who purchased those wealth management products are expected to be affected by the subprime mortgage-related losses. But the commission reiterated that the impact on individual investors should be limited.
These figures were disclosed yesterday by the commission's spokesman, Vice Chairwoman Susan Chang (張秀蓮).
Bonds rise, NT weakens
Ten-year bonds rose on speculation the government will refrain from auctioning one-year debt this month on concern a global credit crunch will widen.
Price of the 10-year bonds climbed 0.7848, or NT$784.8 per NT$100,000 face amount, to 96.5967. The yield declined 9.4 basis points, or 0.094 percentage point to 2.274 percent, according to GRETAI Securities Market.
The NT dollar weakened, halting a two-day rally, pushing the currency down 0.1 percent to NT$32.921 versus the US currency, according to Taipei Forex Inc.