Taiwanese corporate credit profiles might improve further this year on the back of a continued economic recovery and ample liquidity in the banking sector, despite lingering downside risks, Taiwan Ratings said yesterday.
While most companies have sufficient credit strength to fend off long-standing credit risks, the emergence of new risks could pose a significant threat to the least prepared, the local arm of Standard & Poor’s Global Ratings said.
“Taiwanese corporate credit profiles will strengthen further as was seen in the second half of last year, despite economic and political risks such as volatile foreign-exchange rates and higher interest costs,” credit analyst Eva Chou (周怡華) said.
Growing competition from China’s technology supply chain, volatile commodity prices and frosty political ties with China might also weigh, but negative effects were not evident last year, thanks to strong economic recovery at home and abroad, Chou said.
The ratings agency said it expects local non-financial firms to this year face a slightly higher risk of weakening profitability and cash flow due to a high comparison base and a lack of exciting catalysts.
The profit softening might come even though most local corporations last year reduced their debt and strengthened their cash flow generation, Chou said.
However, most Taiwanese firms appear to have the financial capacity to withstand a potential slowdown in their credit metrics, despite challenges from volatile exchange rates and commodity prices, as well as sharpening competition from Chinese peers to supply China’s high-tech sector, Chou said.
Most firms have achieved high cash balances through restrained capital expenditures and conservative capital policies, Chou said, adding that ample liquidity in the banking sector also lends support.
“This should help protect from a potential weakening of their cash flows from modest volatility in exchange rates and commodity prices,” Chou added.
Hefty capital gains among life insurance companies last year helped offset foreign-exchange losses caused by the drastic appreciation of the New Taiwan dollar, senior director Andy Chang (張書評) said.
Local insurers also reported higher interest income following the Fed’s interest rate hikes, he added.
S&P expects global central banks to this year raise interest rates modestly, with an increase of 25 basis points in Taiwan, Chang said.
The property market remains under pressure for price corrections, although transactions last year showed noticeable improvement, analyst Raymond Hsu (許智清) said, citing persistent lack of affordability and oversupply in some parts of the nation.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
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
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last