Shin Kong Financial Holding Co (新光金控) yesterday said it expects earnings to improve beginning this quarter, as it increases its foreign bond holdings ahead of an anticipated interest rate hike cycle in the US.
The expanding foreign bond holdings should drive up the interest income of its main unit, Shin Kong Life Insurance Co (新光人壽), by NT$2 billion (US$62.8 million), Shin Kong Financial chief financial officer Hsu Shun-yun (徐順鋆) told an investors’ conference in Taipei.
“We plan to increase our holdings of US dollar-denominated emerging market bonds by US$1.1 billion, bringing our total international bonds portfolio from NT$317.4 billion at the end of the third quarter to NT$350 billion,” Hsu said.
Hsu added that in the last quarter, the life insurer had increased its holdings of Saudi Arabian government bonds, while reducing its Chinese corporate debt and dim sum bond holdings.
Ahead of the bond holdings increase, Shin Kong Life’s cash position at the end of the first nine months had jumped to 6.2 percent of total investments, compared with 2.3 percent a year earlier, Hsu said.
Shin Kong Financial said that earnings should also improve this quarter, as the company’s recurring yields could receive a boost from potential Fed rate hikes.
“Following the conclusion of the US presidential race, the yield on US dollar-denominated foreign bonds with longer durations have risen by 50 to 60 basis points,” Hsu said.
The company favors emerging market debt as yields on AAA-rated US government debt remains low, despite its recent rally, he said.
Thanks to its stock portfolio adjustment, the company’s investment performance improved at the end of the third quarter, with Shin Kong Life posting an unrealized gain of NT$8.91 billion from available-for-sale financial assets, compared with unrealized losses of NT$13.59 billion during the same period last year.
Shin Kong Financial’s net income in the first nine months fell 53.9 percent year-on-year to NT$2.06 billion, or earnings per share of NT$0.15.
Shin Kong Life also saw its losses widen from NT$40 million to NT$2.01 billion during the same period.
Shin Kong Commercial Bank (新光銀行), the conglomerate’s most profitable unit, saw earnings dip 11.5 percent annually to NT$3.36 billion, led by a 59.3 percent annual dip in investment income to NT$559 million in the first nine months, company data showed.
In the third quarter, Shin Kong Bank’s non-performing loans increased by NT$558 million to NT$851 million from the previous quarter’s NT$292.7 million, mainly due to a NT$318 million default by Pacific Andes and a NT$102 million default by Tingsing Trading Co (鼎興貿易), company data showed.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to