The local financial sector extended gains yesterday from the previous trading session, as buying continued as a result of optimism toward fund injections after the government announced it would allow Chinese banks to take a stake in their Taiwanese counterparts, dealers said.
The buying spree came from institutional investors scrambling to take advantage of low valuations of local financial stocks, which had been hard-hit by fears of their exposure to the debt in the eurozone, the dealers said.
The sub-financial sector index closed up 1.9 percent yesterday, while the TAIEX remained flat at 6,966.35 points from the previous day’s rally.
“The long-awaited market liberalization has triggered strong interest from institutional investors, in particular from foreign institutional investors and local life insurance companies,” Horizon Securities Co (宏遠證券) analyst Benson Huang (黃重善) said.
“The move to allow Chinese banks to acquire stakes in Taiwanese financial entities is expected to provide the local financial sector with large funds for future expansion,” Huang said.
The Financial Supervisory Commission (FSC) said on Tuesday that Chinese banks could acquire up to 5 percent of a local bank or financial holding company.
In collaboration with qualified domestic institutional investors (QDII) from China, the total stake they can own in a Taiwanese financial entity may not exceed 10 percent.
In addition, the Ministry of Finance said a day later that Chinese banks are welcome to become shareholders in Taiwan-based financial entities in which the Taiwanese government owns a stake.
Cathay Financial Holdings Co (國泰金控) rose 4.01 percent to NT$31.15 (US$1.03) and Chinatrust Financial Holding Co (中信金控) gained 4.86 percent to NT$18.35.
In addition, SinoPac Financial Holdings Co (永豐金控) jumped 6.36 percent to NT$9.2 as the market viewed the company as a target of potential Chinese buyers.