Local shares yesterday lost momentum and closed below the 9,200-point mark, amid global concerns over a financial crisis at Deutsche Bank AG.
The TAIEX ended down 104.05 points, or 1.12 percent, at 9,166.85, with turnover of NT$72.70 billion (US$2.32 billion), Taiwan Stock Exchange data showed.
Shares in the financial services sector weakened, with Fubon Financial Holding Co (富邦金控) closing down 1.07 percent at NT$46.3 and Cathay Financial Holding Co (國泰金控) ending 1.47 percent lower at NT$40.1.
Photo: CNA
Deutsche Bank has been a growing concern for investors after US authorities two weeks ago said they are seeking US$14 billion from the bank to settle legal claims over its sales of mortgage securities, complex investments that were one of the key causes of the global financial crisis in 2008.
With the German government giving no sign that it would be prepared to offer a bailout, and the bank heavily exposed to risky investments, notably in the derivatives markets, investors have grown increasingly jittery.
That worry was only temporarily relieved by Deutsche Bank’s move this week to sell an insurance subsidiary for just more than 1 billion euros (US$1.12 billion) to shore up its capital buffers.
However, the latest unease over Deutsche Bank stemmed from reports that about 10 hedge funds had taken measures to reduce their exposure to the bank.
Asian equities fell the most in almost three weeks, with stocks in Japan and South Korea dropping 1.3 percent and 1 percent respectively. Hong Kong also closed down 1.9 percent to pare its best quarterly performance in seven years.
For its part, shares in Germany’s biggest bank yesterday fell to a record low and rekindled broader concerns about Europe’s financial sector. At one moment in frenzied early trading, the bank’s stock fell another 8 percent to below 10 euros per share for the first time, before recovering somewhat to trade 4.3 percent lower at 10.42 euros in Frankfurt, Germany.
The turbulence prompted Deutsche Bank CEO John Cryan to issue an open letter to employees, in which he said the news about the hedge funds is “causing unjustified concerns” and should be seen in the wider context of the bank’s 20 million clients.
“It is our task now to prevent distorted perception from further interrupting our daily business. Trust is the foundation of banking. Some forces in the markets are currently trying to damage this trust,” Cryan said.
The bank is fundamentally strong, is meeting its capital requirements, is profitable and has “an extremely comfortable buffer” when it comes to liquidity, with reserves of more than 215 billion euros, he said.
“There is therefore no basis for this speculation,” Cryan said. “Nor can uncertainty about the outcome of our litigation cases in the US explain this pressure on our stock price, if we take the settlements of our peers as a benchmark.”
Although Cryan’s words seemed to have helped limit the damage in the markets, analysts said it is difficult for a bank to turn around its fortunes once it has been tainted by speculation of financial trouble.
However, the wider worry is that Deutsche Bank might prove to be a “Lehman moment” for the European banking sector. In September 2008, the US government made clear that it was not going to bail out investment bank Lehman Brothers Holdings Inc when it was in huge difficulty.
As Lehman was connected to many other banks, the decision to let it fall proved fateful: It triggered a collapse of confidence in the global financial system that pushed the world economy into its deepest recession since World War II.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
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
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
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],”