Sluggish trading is constraining the earnings of securities companies, but there is no imminent pressure of businesses closing or downsizing, a ratings agency said yesterday.
The government’s proposal to tax capital gains on securities investments — in addition to risk aversion caused by Europe’s debt problems — has negatively affected the TAIEX and the volume of stock market transactions, Sophia Chen (陳怡如), Fitch Ratings Taiwan’s analyst on financial institutions, told a media briefing.
Chen’s comment lent support to securities houses’ complaints that they are bearing the brunt of policy uncertainty as major and daily players stay on the sidelines while politicians wrangle over the plan.
The Taiwan Securities Association (證券公會) has warned of massive layoffs amid falling fee incomes if daily turnover were to remain below NT$80 billion (US$2.69 billion). There are 86 securities houses with 1,200 outlets nationwide employing 50,000 people, according to the association.
Major and daily players — with annual transactions totaling more than NT$50 million — account for only 3.2 percent of all investors numbering 3.41 million, but contribute 41.8 percent of total trading, the association said.
“Securities houses heavily reliant on their brokerage business for income need a daily [market] turnover of NT$100 billion to break even,” Chen said, adding that the need is even more urgent for firms with a small market share.
Up to 30 domestic brokerages that have a market share of less than 1 percent are more vulnerable to stock market downturns and are under greater ratings downgrade pressure, Chen said.
On average, equities transactions — including over-the-counter deals — shrank to NT$89 billion a day last month, compared with NT$132 billion in the first quarter and NT$126 billion last year, Fitch Taiwan senior director Jonathan Lee (李信佳) said.
The volume has slumped even below the daily average of NT$85 billion in 2001 when the technology bubble burst, Lee said.
“While weak sentiment is to blame for the sluggish trading, [Taiwan’s] simpler operations limit securities firms’ ability to boost earnings and cross-border competitiveness,” compared with the more complex business models of their South Korean and Japanese peers, Lee said.
He expects turnover to improve once policy uncertainty settles.
Most securities firms have sufficient capitalization to withstand market volatility, thanks partly to the strict regulatory regime that bars high leveraging, Fitch said.
The ratings agency believes the sector will consolidate as large players seek to enhance synergy benefits through mergers and acquisitions, while smaller standalone brokers struggle to overcome their lack of scale, group support and a cross-selling platform, Chen said.
The pace of integration will likely be gradual, as Taiwan does not allow hostile takeovers and many securities companies are under family control, she said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained