Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) yesterday said that while the commission has detected signs pointing to potential financial risk in China, it has tightened its regulations to limit local lenders’ exposure.
Taiwan Research Institute (台灣綜合研究院) founder Liu Tai-ying (劉泰英) on Tuesday said that Taiwan would next year be threatened by contagion risk from a financial crisis originating in China, which could drag the TAIEX to as low as 6,000 points.
“Although the potential financial crisis in China is concerning, given that Beijing has implemented several new measures to stabilize the market, we do not see any storm ahead,” Koo told the Taipei Times on the sidelines of a meeting of the Legislative Yuan’s Finance Committee.
However, the commission has asked any lender whose exposure to China exceeded 80 percent of its net worth to pay more attention to their credit extensions, Koo said.
The commission has tightened regulations requiring lenders to prepare an allowance for bad debts equal to at least 1.5 percent of their loans offered in the Chinese market, greater than the 1 percent in regular cases, he said.
As for the institute’s forecast that the weighted index would fall to less than 6,000 points, Koo said that the local equity market is easily affected by its regional peers, but the US equity market would be affected more by a US-China trade dispute.
In related news, Minister of Finance Su Jain-rong (蘇建榮) said at the meeting that Tatung Co (大同) should take on more responsibility for financially troubled subsidiary Chunghwa Picture Tubes Co (CPT, 中華映管).
Seven state-owned banks have loaned CPT a total of NT$6.8 billion (US$220.69 million), as well as NT$934 million to Tatung’s solar wafer subsidiary, Green Energy Technology Inc (綠能科技), Su said, adding that he has asked the banks to conduct a risk assessment on their loans.
LCD panel maker CPT, which on Friday last week submitted a restructuring plan to the Taoyuan District Court due to its inability to pay its debts, on Monday offered a payment plan during negotiations with creditors, but was unable to secure their agreement.
Tatung had borrowed NT$113.2 billion as of the end of September, with short-term loans totaling NT$46.5 billion, short-term notes and bills payable reaching NT$1.2 billion, long-term loans due within one year tallied at NT$17.7 billion and other long-term loans totaling NT$47.8 billion, commission data showed.
Among Tatung’s subsidiaries, CPT had borrowed the most, with long-term loans totaling NT$33.1 billion, the data showed.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS