Foreign returns fall for second straight quarter

By Kao Shih-ching  /  Staff reporter

Fri, Sep 13, 2019 - Page 12

The nation’s listed companies last quarter saw their combined returns on investment in China and other foreign markets fall for the second consecutive quarter, with annual drops of 6 percent and 13.39 percent respectively, as the electronics industry faced headwinds, the Financial Supervisory Commission said yesterday.

The electronics industry fared the worst among all industries, as sales slowed down on weaker demand for consumer communications products, including smartphones, Securities and Futures Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) told a news conference in New Taipei City.

A total of 1,197 listed companies — 665 on the Taiwan Stock Exchange (TWSE) and 532 on the Taipei Exchange (TPEX) — invested in China, up by 12 from a year ago, commission data showed.

Their combined returns on investment in China fell NT$7.2 billion (US$231.8 million) to NT$112.6 billion over the period, with TWSE-listed firms performing worse than their TPEX peers after an annual decline of NT$9.6 billion in combined earnings, data showed.

Some companies told the bureau that their sales of high-margin products shrank as Chinese consumers were less willing to spend amid US-China trade tensions, Tsai said.

She also attributed the corporate sales declines to other reasons, including an economic slowdown in China and negative effects of Washington’s trade sanctions on Huawei Technologies Co Ltd (華為).

Although market watchers have fingered trade uncertainty as the most significant challenge for companies that operate in China, Tsai said that the dispute has existed for almost a year, so Taiwanese companies should have already prepared themselves for uncertainty.

For investments in other overseas markets, companies’ total return on investment decreased by NT$30.8 billion from a year earlier to NT$199.1 billion, data showed.

Companies in the electronics, semiconductor, machinery and paper industries reported contractions in earnings owing to weaker demand, Tsai said.

Despite the listless profits performance, new investments in China totaled NT$37.3 billion for the first half of this year, with the computer and electronic component industries comprising the majority, the commission said.

New investments in other overseas regions totaled NT$116.6 billion in the first six months, mostly contributed by the semiconductor industry, it said.

Listed companies with investments in China as of the end of the second quarter repatriated 18.23 percent of their Chinese units’ earnings to Taiwan, or NT$462.3 billion, Tsai said, adding that most firms sent the cash dividends home to improve the financial structure of local units.