The Taiwanese central bank’s surprise interest rate cut may fail to help housing demand because banks are tightening home mortgage lending, a real estate broker said.
The 0.125 percentage point cut will offer little help in lessening the burden of home buyers, Sinyi Realty Co (信義房屋), Taiwan’s only listed real estate broker, said in an e-mailed statement yesterday.
“Home buyers are not getting any easier time in financing housing payments since banks are standing by their tightening credit stance and not willing to lend more,” Stanley Su (蘇啟榮), senior researcher at Sinyi Realty, said in an interview yesterday. “Banks may even put more scrutiny on borrowers as they face heightened default risk following Lehman Brothers’ bankruptcy.”
The central bank on Thursday unexpectedly reduced interest rates for the first time since 2003, bringing Taiwan’s discount rate on 10-day loans to banks to 3.5 percent, and saying that the global financial crisis had heightened risk of an economic slowdown.
The bank last week reduced the amount for deposits that lenders are required to set aside as reserves and injected funds into the money market.
Taiwan’s central bank joins counterparts in China, Australia and New Zealand in lowering rates this month as share markets tumble and global economic expansion falters.
Central banks globally are trying to ease a credit squeeze as US$523 billion in losses and writedowns tied to a slump in the US mortgage market erode investor confidence and prompt bankers to hoard cash.
Lehman Brothers Holdings Inc filed for the biggest bankruptcy in history on Sept. 15, with more than US$613 billion in debt.
“Taiwan’s housing prices are still overpriced,” Chiang Li-wen, manager of Taiwan Cooperative Bank’s (合作金庫銀行) personal banking unit, said by telephone. “Banks need to be aware of default risks as a result of falling housing prices.”
Taiwan Cooperative Bank, the nation’s biggest bank by number of branches, lowered credit lines last year to owners of studio apartments with an area of less than 15 ping (49.5m²), and the bank has no plan to relax the policy, Chiang said.
Home buyers in Taiwan usually secure 80 percent financing from banks, with the payment period lasting 20 years, Chiang said.
Taiwan’s top five banks, including Taiwan Cooperative Bank, issued a total of NT$31.97 billion (US$1 billion) in new mortgage loans last month, the lowest since NT$21.19 billion in loans made in February, the central bank said in a statement this week.
“I’m not buying an apartment now unless housing prices fall significantly lower,” said Eric Yao (姚宗宏), 30, a renter for seven years who helps manage US$152 million in funds at Truswell Securities Investment Trust Co (富鼎投信). “A 12.5-basis-point rate cut is too small to convince me into bearing a mortgage for the next 20 years.”
Japanese technology giant Softbank Group Corp said Tuesday it has sold its stake in Nvidia Corp, raising US$5.8 billion to pour into other investments. It also reported its profit nearly tripled in the first half of this fiscal year from a year earlier. Tokyo-based Softbank said it sold the stake in Silicon Vally-based Nvidia last month, a move that reflects its shift in focus to OpenAI, owner of the artificial intelligence (AI) chatbot ChatGPT. Softbank reported its profit in the April-to-September period soared to about 2.5 trillion yen (about US$13 billion). Its sales for the six month period rose 7.7 percent year-on-year
CRESTING WAVE: Companies are still buying in, but the shivers in the market could be the first signs that the AI wave has peaked and the collapse is upon the world Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported a new monthly record of NT$367.47 billion (US$11.85 billion) in consolidated sales for last month thanks to global demand for artificial intelligence (AI) applications. Last month’s figure represented 16.9 percent annual growth, the slowest pace since February last year. On a monthly basis, sales rose 11 percent. Cumulative sales in the first 10 months of the year grew 33.8 percent year-on-year to NT$3.13 trillion, a record for the same period in the company’s history. However, the slowing growth in monthly sales last month highlights uncertainty over the sustainability of the AI boom even as
AI BOOST: Next year, the cloud and networking product business is expected to remain a key revenue pillar for the company, Hon Hai chairman Young Liu said Manufacturing giant Hon Hai Precision Industry Co (鴻海精密) yesterday posted its best third-quarter profit in the company’s history, backed by strong demand for artificial intelligence (AI) servers. Net profit expanded 17 percent annually to NT$57.67 billion (US$1.86 billion) from NT$44.36 billion, the company said. On a quarterly basis, net profit soared 30 percent from NT$44.36 billion, it said. Hon Hai, which is Apple Inc’s primary iPhone assembler and makes servers powered by Nvidia Corp’s AI accelerators, said earnings per share expanded to NT$4.15 from NT$3.55 a year earlier and NT$3.19 in the second quarter. Gross margin improved to 6.35 percent,
FAULTs BELOW: Asia is particularly susceptible to anything unfortunate happening to the AI industry, with tech companies hugely responsible for its market strength The sudden slump in Asia’s technology shares last week has jolted investors, serving as a stark reminder that the world-beating rally in artificial intelligence (AI) and semiconductor stocks might be nearing a short-term crest. The region’s sharpest decline since April — triggered by a tech-led sell-off on Wall Street — has refocused attention on cracks beneath the surface: the rally’s narrow breadth, heavy reliance on retail traders, and growing uncertainty around the timing of US Federal Reserve interest-rate cuts. Last week’s “sell-off is a reminder that Asia’s market structure is just more vulnerable,” Saxo Markets chief investment strategist Charu Chanana said in
RSS