Shares of financial stocks rose yesterday after China’s banking regulator approved four Taiwanese banks to set up branches in China, but analysts said the move would not provide a significant boost to the banks’ earnings in the near term.
The financial and insurance sub-index on the main bourse edged up 7.51 points, or 0.83 percent, to 907.25 points yesterday, compared with a rise of 0.72 percent on the TAIEX, the Taiwan Stock Exchange’s data showed.
The financial and insurance sub-index has risen 24.21 percent from this year’s low of 730.43 points, set on June 9, on positive sentiment toward the cross-strait financial cooperation following the signing of the Economic Cooperation Framework Agreement (ECFA) between Taiwan and China on June 29.
“We believe that although it is very likely that the China branches of Taiwanese banks will book profits in the first year by transferring business from their Hong Kong branches, the impact on earnings will be minor over the next three years,” JPMorgan analysts Dexter Hsu (許世德), Penny Lin and Sunil Garg said in a client note yesterday.
“We continue to emphasize our view that opportunities will come from domestic reflation following the ECFA, which should lead to a re-rating of Taiwan banks,” the note said.
The China Banking Regulatory Commission issued a statement on Thursday on its Web site that it approved Chang Hwa Commercial Bank (彰化銀行), Land Bank of Taiwan (土地銀行), First Commercial Bank (第一銀行) and Taiwan Cooperative Bank (合庫銀行) to upgrade their representative offices into branches in China, allowing the lenders to do yuan business with Taiwanese companies after a one-year operating history and recorded profit.
Shares of Chang Hwa rose 3.1 percent to NT$19.90, and Taiwan Cooperative Bank’s increased 1.9 percent to NT$21.50. Shares of First Financial Holding Co (第一金控), parent of First Bank, advanced 1.79 percent to NT$19.85. Land Bank of Taiwan is not listed on the local bourse.
Credit Suisse analyst Chung Hsu (許忠維) said yesterday in a separate report that the Chinese regulator’s approval on Thursday came much earlier than expectations of a period between the fourth quarter and early next year.
However, the Swiss brokerage said these banks would see limited business expansion in China over the next three to four years, citing many remaining restrictions.
Separately, both JPMorgan’s Hsu and Deutsche Bank analyst Nora Hou (侯乃鳳) said Taiwanese banks should be well prepared for the new banking regulations, known as Basel III, after the Financial Supervisory Commission said on Thursday that Taiwan’s 35 domestic lenders would need to raise an additional NT$85 billion (US$2.68 billion) in capital if Basel III were to be implemented today. In particular, state-owned banks would need to raise NT$36 billion.
“We notice large, state-controlled banks are more in need of capital versus their private peers,” Hou said in a report yesterday. “Nevertheless, we believe the actual amount of recapitalization could be much less, owing to a long-enough transition period and banks’ continued earnings improvement.”
Deutsche Bank favors Fubon Financial Holding Co (富邦金控), parent of Taipei Fubon Bank (台北富邦銀行), among local financial stocks because the company is driven mainly by its insurance business rather than banking, Hou said. Fubon Financial rose 1.28 percent to NT$39.6.
Just a few years ago, the millennial generation — generally defined as those born from the early 1980s through the mid-1990s — was synonymous with youthful rebellion. However, now, as the millennials ease into early middle age, they are finding their path out of their parents’ basement to be a lot harder than it was for earlier generations. The fundamental problem is that millennials are not building wealth. The wealth of the median US household headed by someone 35 or younger has actually shrunk in inflation-adjusted terms since the mid-2000s, even as the wealth of older Americans has continued to grow. An
Gogoro Inc (睿能創意) yesterday launched its first electric bicycle, the Gogoro Eeyo 1, in Taiwan, after unveiling the bike in New York in late May and in France on Tuesday. The company said it would also introduce the series in other European countries such as Germany and the Netherlands. The “Eeyo project” is the fourth of Gogoro’s eight projects that concentrate on smart transportation, which includes Gogoro’s electric scooter, battery swap system and electric scooter sharing service, company founder and chief executive officer Horace Luke (陸學森) told a media briefing in Taipei. “There are various types of city commuters. We will not
EXPERIMENTAL DRUG: While news about a COVID-19 vaccine is more eye-catching, developing a treatment would be more viable, the Senhwa boss said Senhwa Biosciences Inc (生華科) aims to raise NT$1.5 billion (US$50.57 million) by issuing 15 million new common shares in the third quarter of this year to fund the research of new drugs, including the experimental drug Silmitasertib for the treatment of COVID-19, the company said on Monday. That would be the firm’s largest fundraising effort after it raised more than NT$1.4 billion from an initial public offering on the Taipei Exchange (TPEX) in April 2017, chief financial officer Sarah Chang (張小萍) told the Taipei Times by telephone. The price of the new shares would depend on the firm’s average share price
NOT A PANACEA: Offering 5G services would not solve the problem of declining telecom incomes, chairman Sheih Chi-mau said, expecting a flat 5G telecom revenue Chunghwa Telecom Co (中華電信) yesterday became the nation’s first telecom to debut its 5G services, offering tiered tariffs that include a threshold of NT$599 and flat rates, as it aims to switch half of its subscribers to the 5G network within three years. Subscribers would have unlimited data transmission for monthly fees starting at NT$1,399 — the same flat rate as when the company launched its 4G service in 2014 — and they can subscribe to the highest-rate plan for NT$2,699 per month for faster data transmission speeds and larger bandwidth, the company said. Data transmission speeds would be within the range