Cathay Financial Holding Co (國泰金控) and Fubon Financial Holding Co (富邦金控) shares yesterday moved higher, outperforming the broader market after going ex-dividend, dealers said.
The gains posted by the two leading financial holding companies helped the local main board fend off selling of many electronics stocks caused by volatility among high-tech stocks on Wall Street.
It was also one of the factors that prevented the weighted index from closing in negative territory, they said.
Cathay Financial shares rose 1.04 percent to close at NT$48.60 and shares in Fubon Financial gained 0.86 percent to end the day at NT$46.85 on the Taiwan Stock Exchange, while the TAIEX closed up 0.17 percent.
The two financial stocks attracted buying soon after the local equity market opened, while the weighted index fell, led by the electronics sector, reflecting losses suffered by high-tech stocks in the US on Friday.
Market analysts said that many of the investors who rushed to pick up the two stocks believe their share prices will quickly return to pre-ex-dividend levels on the back of their strong bottom lines.
Cathay Financial’s reference opening price was NT$48.10, which was NT$2 lower than the closing price on Friday, with the reduction in the share price equivalent to its cash dividend.
Fubon Financial’s reference opening price was set at NT$46.45, also a cut of NT$2 and equivalent to the company’s cash dividend payout.
Analysts said that since listed companies on the local equity market are scheduled to issue cash dividends in the third quarter, Cathay Financial, Fubon Financial and other financial firms that have invested heavily in local equities would benefit from large cash dividend payments.
Fubon Financial and Cathay Financial are expected to receive from NT$5 billion to NT$10 billion (US$164 million to US$329 million) in cash dividends each in the third quarter, helping them overcome the impact of foreign-exchange losses, which were particularly high in the first quarter when the New Taiwan dollar rose about 6 percent against the US dollar.
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