World markets slipped lower yesterday, led by bank stocks after US President Barack Obama proposed a sweeping overhaul of Wall Street to avert future financial crises.
Obama said he would seek to limit the size and complexity of large financial institutions so that their collapse wouldn’t imperil the broader financial system and world economy or cost taxpayer money in bailouts.
The announcement spooked investors, causing a sharp sell-off in the US and Asia. Markets recovered some of their poise by the European open, with the British stock index FTSE 100 down 0.1 percent at 5,331.05 and Germany’s DAX shedding 0.4 percent to 5,721.50. France’s CAC-40 lost 0.3 percent to 3,850.31.
Bank stocks were hit hardest, with Barclays Plc down 4.5 percent, Royal Bank of Scotland Plc 3.0 percent and Deutsche Bank 4.3 percent lower.
Obama’s plan to curb proprietary trading will cost Goldman Sachs Group Inc, Morgan Stanley, Credit Suisse Group AG, UBS AG and Deutsche Bank AG about US$13 billion next year, JPMorgan Chase & Co analysts said.
Of the five banks analyzed, Obama’s proposals will impact Goldman Sachs the most, resulting in an estimated US$4.67 billion drop in earnings next year, analysts led by London-based Kian Abouhossein said in a note yesterday. UBS stands to lose the least, with revenue declining an estimated US$1.92 billion.
Taiwanese shares closed lower, with the TAIEX index falling 200.56 points, or 2.47 percent, to close at 7927.31, but the nation’s Financial Supervisory Commission said that foundations of local bourse are strong, and so far this year, TAIEX performance is better than its peers in Shanghai, Hong Kong and Singapore.
Taiwan’s export orders, an indication of shipments in the next one to three months, climbed 52.6 percent last month from a year earlier, after a 37.1 percent increase in November, the Ministry of Economic Affairs reported on Wednesday.
Total revenues of public companies saw year-on-year growth of 47.35 percent to NT$1.62 trillion (US$49.2 billion) last month, while their profits before tax expanded 3.84 percent to NT$313 billion, the commission said.
Industries like commodities suffered big drops as concerns about global demand prompted investors to scale back.
Additional reporting by Jason Tan
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