A small local stock brokerage may become the first victim of ongoing policy discussions about a capital gains tax on securities investments.
Ding Fu Securities Co (鼎富證券) has reportedly approached Yuanta Financial Holding Co (元大金控) for talks about a possible merger with its brokerage subsidiary, the Chinese-language Commercial Times reported yesterday.
The report, which did not cite a source, said Yuanta Financial had assigned Yuanta Polaris Securities Co (元大寶來證券) to conduct an assessment and due diligence into the merger candidate, hoping to reach a conclusion within a week.
Yuanta Financial spokesman Chuang Yu-de (莊有德) yesterday declined to comment on the report.
“There is no proposal about a deal with Ding Fu Securities on the board meeting agenda,” Chuang said, adding that the company would make a formal announcement if there is any progress over the deal.
Established in 1998, the unlisted Ding Fu Securities has registered capital of NT$320 million and a market share of 0.22 percent.
Yuanta Polaris Securities, the nation’s largest securities company after the integration of Yuanta Securities Co (元大證券) and Polaris Securities Co (寶來證券) through a share-swap deal announced last year, commands a market share of 13.45 percent and a network of 189 outlets nationwide.
The report said Yuanta Polaris Securities would see its market share increase to 13.67 percent if the alleged acquisition goes through, widening its lead over second-placed KGI Securities Co (凱基證券), which has a market share of 8.99 percent.
The news about the likely merger talks came after market worries about the proposed capital gains tax depressed the TAIEX and reduced market turnover, posing a threat to the operation of securities houses.
Turnover on the stock market remained at a low NT$77.86 billion (US$2.63 billion) yesterday, compared with an average daily turnover of NT$118 billion during the first four months of the year. On Monday, trading volume fell to NT$46.76 billion, the lowest level in three years, Taiwan Stock Exchange data showed.
Based on the stock exchange’s latest statistics, 84 local securities companies swung into a net loss of NT$263 million last month, from a combined net profit of NT$1.75 billion in March.
In the first four months of the year, these companies — including 47 integrated securities firms, 36 dedicated brokerages and one futures brokerage — reported NT$8.71 billion in net profit, down 16.78 percent year-on-year, the data showed.
Integrated securities firms are brokerages that can do brokering trade, proprietary trading and underwriting, while securities brokers are only allowed to trade equities.
Last month, Yuanta Securities ranked the most profitable among the integrated securities firms, posting NT$767.72 million in net profit, ahead of SinoPac Securities Co (永豐金證券) with NT$78.39 million and Jih Sun Financial Holding Co (日盛金控) with 48.91 million, the stock exchange’s data showed.