RESILIENT MARKET: Although the housing market appeared unaffected by COVID-19, Cathay Real Estate Development still warned of possible fallout in the long term
Presale and new housing transactions last quarter totaled NT$382.7 billion (US$12.96 billion), rising by double-digit percentages from the previous quarter and a year earlier, as the market emerged from the COVID-19 pandemic unscathed, thanks to real demand and ample liquidity, a survey released by Cathay Real Estate Development Co (國泰建設) showed. The transaction volume surged 42.9 percent from three months earlier and increased 14.7 percent from the same period last year, it said. “The market appeared unaffected by the virus outbreak in light of the second-quarter results, but people had better be cautious and watch out for the pandemic’s fallout in the long run,” the quarterly report said on Thursday last week. Housing prices soared 24.14 percent in Taichung to NT$274,700 per ping (3.3m2) in Taichung and jumped 12.34 percent to NT$266,800 in Taoyuan, the report showed. Prices gained 7.59 percent to NT$264,700 per ping in Hsinchu and grew 5.91 percent to NT$228,800 per ping in Tainan. Taipei reported a 2.42 percent pickup in housing prices to NT$823,700 per ping and Kaohsiung witnessed a 1.53 percent increase to NT$237,100 per ping, the report said. Housing prices in New Taipei City bucked the trend with a 1.93 percent decline to NT$403,100 per ping, it said. Jinwen University of Science and Technology finance professor Chang Ting-hsuan (章定煊) said he was surprised at the rapid increase in housing prices, which reflected confidence on the part of developers and acceptance on the part of buyers. Usually, it takes several years to see prices advance by double-digit percentages, Chang said. Although real demand lent support, a sizable number of investors likely rejoined the market because of ultra-low interest rates in most other investment tools around the world, he said. The central bank in March cut its policy rates to a record low of 1.125 percent, while peers in the US, Europe and Japan kept
DBS Bank Ltd yesterday revised upward its forecast for Taiwan’s GDP growth this year to 0 percent, compared with the minus-1 percent estimate it made in April, citing the nation’s success in containing the COVID-19 pandemic and competitiveness in the technology sector. The adjusted forecast came after a quarterly contraction of 8.8 percent in the second quarter was more moderate than expected, DBS economist Ma Tieying (馬鐵英) said in a report. The lender expects Taiwan’s economy this quarter to post a 7 percent quarterly gain followed by a quarterly increase of 2 to 3 percent in the fourth quarter, Ma said. With the number of domestic COVID-19 cases in Taiwan contained at near zero for about 100 consecutive days, Taiwan’s retail and recreation activities, as measured by Google’s location services data, almost normalized last month, compared with a 6 percent fall in June and a 12 percent decline during the April-to-May period, she said. A second wave of infections, which would be a drag on economic recovery in many countries, would not affect domestic demand, given that there has been no tightening of COVID-19 restrictions after most of them were lifted in June, she added. However, a second wave of infections and renewed lockdowns in other countries could indirectly hurt Taiwan, as the US, Europe and Japan, where the number of COVID-19 cases is resurging, are important export markets for Taiwan, accounting for a combined share of about 30 percent of exports, Ma said. Private investment is likely to grow, given that Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) last month revised up its capital expenditure plan for this year to top US$17 billion, from an original budget of US$15 billion to US$16 billion, Ma said. TSMC is also likely to benefit from Intel Corp’s plan to outsource some chip production to a third-party due to the delay
Cathay Life Insurance Co (國泰人壽), Taiwan Life Insurance Co (台灣人壽) and China Life Insurance Co (中國人壽) this month cut their declared interest rates for interest-sensitive products due to lower bond yields. The declared rates are used by insurers to calculate policyholders’ distributions, based primarily on their investment returns. Cathay Life, the nation’s leading insurer with a market share of 19.19 percent, yesterday announced reductions of 5 to 10 basis points for the benchmark rates of its 62 US dollar-denominated policies, and reductions of 1 to 15 basis points for its 77 policies denominated in New Taiwan dollars. After the revision, the rates for its US dollar products fell to 1.85 percent to 3.15 percent, while those of its NT dollar policies dropped to 0.46 percent to 1.75 percent, Cathay said in a statement. The insurer trimmed the rates as yields of corporate bonds continued to retreat last month, with the 10-year US Treasury yields falling to about 0.54 percent, a historically low level, Cathay Life executive vice president Lin Chao-ting (林昭廷) told the Taipei Times by telephone. As the insurer buys bonds every month, the decline in bond yields would lead to a reduction in its investment returns, Lin said. Taiwan Life kept the rates for its US dollar policies unchanged, but cut the rates for some of its NT dollar products by 1 basis point due to the fall in Taiwan’s 10-year government bonds. China Life reduced the rates for its five NT dollar products by 10 basis points to a range of 2.03 percent to 2.15 percent. However, three other major insurers — Nan Shan Life Insurance Co (南山人壽), Shin Kong Life Insurance Co (新光人壽) and Fubon Life Insurance Co (富邦人壽) — kept their declared rates unchanged for this month. Insurers’ moves on their declared rates reflect their expectation on long-term investment returns rather than their
Ample Electronic Technology Co (勤凱科技), which supplies conductive paste to passive components maker Yageo Corp (國巨), yesterday said that net profit soared to a record high of NT$35.03 million (US$1.19 million) last quarter thanks to robust demand from solar and passive components customers. Net profit jumped from NT$4.05 million a year earlier and surpassed the company’s net profit of NT$29.43 million for the whole of last year. On a quarterly basis, net profit grew 32.59 percent from NT$26.42 million. Earnings per share (EPS) surged to NT$1.27 last quarter, compared with NT$0.14 a year earlier and NT$0.96 a quarter earlier. In the first half of the year, Ample accumulated NT$61.44 million in net profit, up from NT$13.83 million a year earlier. EPS climbed to NT$2.23 from NT$0.49. Revenue almost doubled to NT$557 million in the first half from NT$282 million a year earlier. The company generated 90 to 95 percent of its revenue from conductive paste used in passive components. Ample expects growth momentum to extend into next quarter, driven by new orders and new customers. Pent-up demand created by the COVID-19 pandemic is also expected to fuel growth later this year, it said. In light of growing demand for cloud-based and artificial intelligence applications amid the pandemic, as well as 5G applications, the company in May added a second shift to its production lines to boost capacity, Ample said. Yageo and its subsidiary Chilisin Electronics Corp (奇力新) are Ample’s biggest customers, although they make up less than 50 percent of the company’s annual revenue. Ample said earlier this year that it was diversifying its customer portfolio by increasing shipments to Walsin Technology Corp (華新科) and securing new customers in South Korea and Japan. Ample’s board of directors has approved the issuance of convertible corporate bonds worth NT$150 million to repay debts and replenish operational capital.
DOMESTIC SHIFT: Taiwan’s manufacturing activity last month ticked up, separating growth from contraction, as work-from-home equipment demand helped chip sales
Asia’s factory pain last month continued to ease with contraction slowing in big export-reliant nations, adding to hopes the region is steadily emerging from the devastating effects of the COVID-19 pandemic. Manufacturing activity in China expanded at the fastest pace in nearly a decade as domestic demand improved, a private sector survey showed yesterday, suggesting that the world’s second-largest economy would help cushion the pandemic’s blow to world growth. Worries about a second wave of infections might weigh on global demand and business sentiment, keeping any rebound in Asia’s factory output feeble, some analysts say. Japan, for one, would enjoy only a “very gradual and protracted recovery” as concerns about a resurgence in COVID-19 cases would weigh on domestic and overseas spending, Oxford Economics senior economist Stefan Angrick said. “With the pace of recovery slowing in some of Japan’s key trading partners, exports and business spending are likely to continue to struggle,” he said. China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) last month rose to 52.8 from June’s 51.2, marking the sector’s third consecutive month of growth and the biggest jump since January 2011. The upbeat findings echoed an official survey on Friday, adding to evidence the world’s second-largest economy is getting back on its feet faster than expected. Japan and South Korea saw factory activity shrink at a much slower pace, a sign that pressures on manufacturers were easing and raising hopes the worst impact from the pandemic was over. Japan’s final Jibun Bank Flash Manufacturing PMI last month rose to a seasonally adjusted 45.2 from 40.1 in June, marking the slowest pace of contraction in five months. South Korea’s IHS Markit PMI rose to 46.9 last month from 43.4 in June, the highest reading since January, reflecting easing pressure on output and new orders. A gauge of expectations for South Korea’s manufacturing output over the next 12 months
‘BRIDGING ECONOMIES’: HSBC makes 90 percent of its profit in Asia, and despite US-China trade tensions, said it could remain a conduit between China and the West
HSBC Holdings PLC yesterday said profits for the first half of this year plunged by 69 percent year-on-year as the banking giant was hammered by the COVID-19 pandemic and spiraling China-US tensions. The lender reported post-tax profit of US$3.1 billion while pretax profit was US$4.3 billion, a 64 percent drop on the same period last year. Reported revenue was down 9 percent at US$26.7 billion. The figures missed analyst forecasts and the bank also raised its estimate for loan losses from US$8 billion to US$13 billion. Its shares plunged more than 4 percent on the Hong Kong stock exchange after the results were released in the lunch break, trading at HK$33.55. HSBC chief executive officer Noel Quinn described the first six months of the year as “some of the most challenging in living memory.” “Our first-half performance was impacted by the COVID-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility,” he said in a statement to the Hong Kong stock exchange. Even by the standards of the current economic maelstrom engulfing global banks, HSBC has had a torrid time. Before the COVID-19 pandemic it was beset by disappointing profit growth, ground down by US-China trade dispute uncertainties and Britain’s departure from the EU. The Asia-focused lender embarked on a huge cost-cutting initiative at the start of the year, including plans to slash about 35,000 jobs, as well as trimming fat from less profitable divisions, primarily in the US and Europe. The pandemic upended some of that cost-cutting drive with banks hammered by market volatility and the economic slowdown caused by the pandemic. However, HSBC has a further headache — geopolitical tensions from its status as a major business conduit between China and Western nations. HSBC makes 90 percent of its profit in Asia, with China and Hong Kong being the major drivers of growth. “Current tensions between
Microsoft Corp on Sunday announced that it would continue talks to acquire the US operations of popular video-sharing app TikTok, after meeting with US President Donald Trump, who seemingly backed off his earlier threats to ban the Chinese-owned platform in the US. “Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States,” the company said in a statement, acknowledging the “importance of addressing the president’s concerns” over national security. Microsoft added that it would continue negotiations with ByteDance Ltd (字節跳動), TikTok’s Chinese parent company, with the intention of “completing these discussions no later than September 15.” The statement came after Trump on Friday said that he would ban the app, which is especially popular with young audiences who create and watch its short-form videos, and has an estimated 1 billion users worldwide. TikTok should be sold or blocked in the US, US Secretary of the Treasury Steven Mnuchin told ABC earlier on Sunday, while US Secretary of State Mike Pompeo said on Fox News that the president would “take action in the coming days with respect to a broad array of national security risks that are presented by software connected to the Chinese Communist Party.” TikTok denies it could be a tool for Chinese intelligence, with its US general manager, Vanessa Pappas, saying on Saturday: “We’re not planning on going anywhere.” In its statement, Microsoft said it plans to “build on the experience TikTok users currently love, while adding world-class security, privacy and digital safety protections.” Buying TikTok would give Microsoft a chance to break into the social networking market. The IT group owns the professional networking platform LinkedIn, and Teams, an internal messaging service for companies. Pappas on Saturday promised to create 10,000 US jobs at TikTok over the
The US$16.4 billion purchase of Varian Medical Systems not only gives Siemens Healthineers AG an entry into cancer treatment — one of the hottest areas in medical technology — but also opens a potential path into Germany’s benchmark DAX. “We’ll create additional free float which eventually will lift us into the DAX,” Healthineers chief executive officer Bernd Montag said in an interview with Bloomberg TV. “We are very certain about this transaction, it’s the right time, and we are super confident about financing.” The Erlangen, Germany-based maker of magnetic resonance imaging machines and laboratory equipment on Sunday announced it is offering US$177.50 a share for Palo Alto, California-based Varian, 24 percent more than its closing price on Friday. With Varian, Healthineers would gain market share in devices and software used for cancer therapy. Recent developments in radiation therapy, coupled with more precise imaging, have been linked to lower cancer death rates, which Montag said the company is keen to capitalize on. The deal has “clear strategic rationale,” Citigroup analyst Kate Kalashnikova said in a note. “The combined company will have the most comprehensive cancer portfolio in the industry.” The deal is the biggest healthcare acquisition this year. The purchase would be financed through both debt and equity, Healthineers said. That includes a 15.2 billion euro (US$17.9 billion) bridge loan from parent Siemens AG, followed by a capital increase this year that Siemens would not participate in. As a result, the parent company’s stake in Healthineers would decline to about 72 percent from 85 percent, Siemens said. “Varian will get access to our broad clinical data pool, which will enable us to more quickly develop a wider range of personalized and precise therapies,” Montag said in a call on Sunday.
Lord & Taylor, one of the US’ oldest department stores, and Tailored Brands, the parent company of Men’s Wearhouse and Jos. A. Banks, on Sunday filed for bankruptcy, joining a growing list of stores slammed by the COVID-19 pandemic. Many of the companies that have filed for Chapter 11 bankruptcy in the past few weeks were already struggling, but the forced closure of nonessential stores in March pushed them to the brink. Lord & Taylor, which was last year sold to the French rental clothing company Le Tote Inc, on Sunday filed for bankruptcy protection in the US Bankruptcy Court for the Eastern District of Virginia. In an announcement on its Web site the company said it was looking for a new owner. Like many retailers, Lord & Taylor was already struggling with the shift to online shopping even before the pandemic struck this spring. Last year, it sold its flagship building on New York’s Fifth Avenue after more than a century in the 11-story building. The company was founded as a dry goods store in 1826. There are several dozen Lord & Taylor stores across the country. Tailored Brands, which filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of Texas, said it would continue to operate Men’s Wearhouse and Jos. A. Banks stores, along with K&G Fashion Superstore and Moores Clothing for Men. The company said in a release that a restructuring plan is expected to reduce the company’s funded debt by at least US$630 million and provide increased financial flexibility.
Seven & i Holdings Co, the world’s largest convenience store franchiser, agreed to buy Marathon Petroleum Corp’s Speedway gas stations for US$21 billion, betting that an expanded US footprint will deliver growth amid the uncertainty of the pandemic. The transaction, to be paid in cash and partly financed using debt, will add about 3,900 stores to 9,800 locations operated by the retailer’s US-based 7-Eleven unit, the Tokyo-based company said in a statement yesterday. The deal is the second-largest purchase of a US target this year and the biggest yet for Seven & i, a retail giant with 69,000 stores worldwide, including 7-Eleven outlets and Ito-Yokado supermarkets in Japan. Seven & i spent US$3.3 billion three years ago to buy Sunoco LP gas stations and convenience stores in a push to expand its US footprint. “This is a historic first step as we seek to become a global retailer,” chief executive officer Ryuichi Isaka said on a conference call yesterday. Marathon follows a long line of energy companies that are shedding retail networks to focus on making fuel. The deal, the biggest in the oil sector since the COVID-19 outbreak, comes as retailers look to shift their focus amid the pandemic, which has further upended a sector already being impacted by the onset of e-commerce. Marathon said it would use US$16.5 billion in after-tax proceeds to reduce debt and bolster dividend payments. Isaka has overseen a broad restructuring of the Japanese firm since taking the helm in 2016, with a focus on expanding in the US. Seven & i has been pressured by a saturated convenience store market in Japan and a tight labor market that makes its 24-7 operating model challenging. “Japan’s convenience store market is at its limit as the population ages,” said Hiroaki Watanabe, a logistics analyst and author of a book on Japan’s convenience
EUROZONE Factories rebound Factories across the eurozone last month saw an even stronger return to growth than initially reported, marking the region’s first manufacturing expansion in one-and-a-half years. With consumer goods performing particularly well, IHS Markit’s manufacturing purchasing managers’ index came in at 51.8, beating a flash estimate and higher than June’s 47.4. Companies in the sector continued to see backlogs of work decline and cut jobs for the 15th successive month — a potential warning sign for future activity. The headline reading in Germany was also higher than initially estimated, but the report also showed “deep cuts” to employment. JAPAN Tourism scheme under fire A US$16 billion campaign to revive domestic tourism is ill-timed and not the best use of taxpayer money, said Yutaka Harada, a former central bank board member and vocal advocate of Prime Minister Shinzo Abe’s “Abenomics” policies. Harada said that the central bank had taken sufficient steps to cushion the pandemic’s immediate blow to the economy, and that fiscal policy must now take a lead role in supporting growth. “I’m not sure whether fiscal policy is doing the job right,” he said yesterday, criticizing Abe’s campaign to promote travel across the country. SINGAPORE MAS revises banking rules The Monetary Authority of Singapore (MAS) yesterday said it plans to revise rules governing foreign banks with a substantial local presence that might allow them to open digital-only banking subsidiaries. Under the enhanced framework, the MAS would consider granting an additional full banking license to foreign lenders which substantially exceed its Significantly Rooted Foreign Bank criteria, the central bank said in a statement. “This will enable them to have the same flexibility as Singapore-incorporated banking groups to establish subsidiaries, including with joint-venture partners, to operate new or alternative business models such as a digital-only bank,” the statement said. BANKING SocGen reports losses Societe Generale SA (SocGen) yesterday said the
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India
An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion rupees (US$1.47 billion) of investments to set up mobile phone manufacturing units in India. Taiwan’s Foxconn Technology Group (富士康科技集團), Wistron Corp (緯創) and Pegatron Corp (和碩), all iPhone assemblers, are among companies picked to make smartphones under a production-linked incentive plan, Indian Minister of Electronics and Information Technology Ravi Shankar Prasad told a news conference in New Delhi on Saturday. The move could boost the value of phone output to 11.5 trillion rupees in the next five years, he said. The incentives are aimed at encouraging global companies to shift their manufacturing beyond China after a pandemic-induced trade dispute put the focus on risks to supply chains. The step is also part of Indian Prime Minister Narendra Modi’s calls for a self-reliant India aimed at boosting local manufacturing and reducing dependence on imports. “The move is not against any country, but is India positive,” Prasad said. The aim is for India to become a big global player in the electronics manufacturing segment, he said. The plan is expected to generate 300,000 direct jobs and 900,000 indirect jobs in the next five years. Indian companies including Dixon Technologies and Optiemus Electronics have also applied to take advantage of the incentive program. Companies that
RIGHT DIRECTION: Thanks to its cloud computing, PC and optoelectronics businesses, the firm’s revenue increased 28.3 percent, 10.3 percentage points better than predicted
Electronic component maker Lite-On Technology Corp (光寶科技) last week reported better-than-expected profit margins and earnings per share for last quarter, thanks to a better product mix, strict operating expense control and effective inventory management, the company said. Lite-On also announced that Raymond Soong (宋恭源) and Warren Chen (陳廣中) have resigned as chairman, and vice chairman and group chief executive officer, respectively, with Tom Soong (宋明峰) elected as chairman by the board of directors and Anson Chiu (邱森彬) appointed to serve as president, with effect from Saturday. Tom Soong is the son of Raymond Soong, while Chiu formerly served in the company’s optoelectronics branch. Lite-On reported a gross margin of 19.41 percent last quarter, with operating margin hitting 8.72 percent and earnings per share rising to a record high of NT$1.48. Net income increased 119.15 percent quarter-on-quarter and 43.9 percent year-on-year to NT$3.45 billion (US$116.9 million), according to the company’s financial statement released after its quarterly earnings conference last week. With more contributions from its cloud computing, PC and optoelectronics businesses, the company’s revenue for last quarter reached NT$41.796 billion, a quarterly increase of 28.3 percent, the statement said. The increase in sales exceeded the company’s forecast of 18 percent and was carried by strong demand from its cloud computing, notebook, 5G and artificial intelligence of things (AIoT) businesses. However, last quarter’s revenue was still down 6 percent from a year earlier due to difficulties in supply chain management amid the COVID-19 pandemic. By segment, the information technology unit remained Lite-On’s biggest business with a sales contribution of 68 percent last quarter. Its optoelectronics unit accounted for 17 percent of sales, and the storage unit contributed to 11 percent of sales, company data showed. “Lite-On once again posted upbeat results in the second quarter. We believe it can repeat its solid performance going forward on the back of
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the only suitor in concrete discussions with Softbank, the sources said. A deal for Arm could be the largest ever in the semiconductor industry, which has been consolidating in the past few years as companies seek to diversify and add scale. However, any deal with Nvidia, which is a customer of Arm, would likely trigger regulatory scrutiny, as well as a wave of opposition from other users. Cambridge, England-based Arm’s technology underpins chips that are crucial to most modern electronics, including those that dominate the smartphone market, an area in which Nvidia has failed to gain a foothold. Customers including Apple Inc, Qualcomm Inc, Advanced Micro Devices Inc (AMD) and Intel Corp could demand assurances that a new owner would continue providing equal access to Arm’s instruction set. Such concerns resulted in Softbank, a neutral company, buying Arm the last time it was for sale. It bought Arm for US$32 billion four years ago. No final decisions have been made, and the negotiations could drag on longer or fall apart, the sources said. Representatives for Nvidia, Softbank and Arm declined to comment. “With Nvidia’s low-cost fabless model enabling it to focus on R&D, engineering and programming, the fit with Arm would be perfect,” Mirabaud Securities
Domestic gasoline and diesel prices are to increase by NT$0.1 per liter today, even though international crude oil prices dropped last week, CPC Corp, Taiwan (CPC, 台灣中油) and Formosa Petrochemical Corp (台塑石化) announced separately yesterday. Effective today, gasoline prices at CPC stations are to rise to NT$22.4, NT$23.9 and NT$25.9 per liter for 92, 95 and 98-octane unleaded gasoline respectively, while premium diesel is to increase to NT$19.7 per liter, the state-run refiner said in a statement. Formosa said that its prices for 92, 95 and 98-octane unleaded gasoline would rise to NT$22.4, NT$23.8 and NT$25.9 per liter, respectively, while premium diesel would cost NT$19.5 per liter. CPC said that based on its floating oil price formula, the cost of crude oil decreased by US$0.58 to US$43.06 per barrel from a week earlier, as fears about the spread of COVID-19 battered sentiment in the global oil market. However, considering the rising operating costs of gas stations, the refiner said that it would slightly adjust gas station operating expenses upward. That would have resulted in it hiking gasoline prices by NT$0.5 per liter and diesel prices by NT$0.7 per liter, but to comply with a government policy of keeping domestic fuel prices the lowest in Asia, CPC said that it had to raise gasoline and diesel prices by just NT$0.1 per liter. The refiner also announced price cuts for liquefied natural gas (LNG) products and left prices unchanged for liquefied petroleum gas products, effective yesterday. The average price per cubic meter of LNG this month would drop 2.97 percent from last month, CPC said. As a result, households would pay NT$6.3 to NT$9.45 less for an average LNG consumption of 30m3 to 45m3 per month, it said.
The cause of a fire late on Saturday at a Nankang Rubber Tire Corp (南港輪胎) plant in Hsinchu County’s Sinfeng Township (新豐) is under investigation, but the blaze is not expected to have a major effect on operations, the company said yesterday. The fire began about 11:30pm on Saturday, and was extinguished about 1am yesterday, it said. There were no casualties and damage to the plant was limited, the nation’s second-largest tire maker said in a regulatory filing. A preliminary investigation indicated the fire broke out in a machinery room on the top floor of a building outside the production plant, Nankang said. There were no raw materials, semi-finished products or finished products at the site, so there were no chemical leaks or emissions that could harm human health, despite what some local media reports said, Nankang said. Determining whether the blaze was sparked by overheating machinery or some other problem would have to wait until technicians arrived at the plant today to investigate the fire, it said. “As the affected area is not the main production area, and the fire was extinguished in a timely manner, losses were controlled to a certain extent,” Nankang said, adding that it was fully insured against fires. With some internal adjustments, it would be able to maintain normal operations, it added. Nankang reported revenue of NT$1.96 billion (US$66.44 million) in the second quarter, down 15.7 percent from the first quarter and 19.7 percent from a year earlier, mainly due to lower shipments amid the COVID-19 pandemic. However, shipments have improved every month over the quarter, and monthly sales growth remained in the positive territory in May and June compared with the decline seen in April, company data showed. In the first half of the year, revenue totaled NT$4.16 billion, down 28.65 percent from a year earlier. Nankang has yet
The Financial Supervisory Commission (FSC) said that it would announce which banks have won permission to develop new wealth management products for high-asset customers after banks submit their applications by Sept. 15. The announcement on Thursday came after the Regulations Governing Banks Conducting Financial Products and Services for High-Asset Customers (銀行辦理高資產客戶適用之金融商品及服務管理辦法) took effect last week. The regulations allow banks with better capital adequacy and large-scale asset management — such as with assets under management (AUM) of at least NT$300 billion (US$10.17 billion) — to develop new wealth management products with higher investment risks, the commission said. Banks that only meet 70 percent of the AUM requirements would also be considered for the program if they specifically commit to expanding their investments, AUM size and employee recruitment in the next three years, the commission said. The final criterion was added earlier this year as the commission aims to encourage more domestic investment, Banking Bureau Director Sherri Chuang (莊琇媛) told a news conference in New Taipei City. “After a preliminary review, we think 18 banks, 13 privately run banks and five state-owned banks, would qualify to apply to conduct the new business,” Chuang said. After banks file their applications, the commission would use their financial reports for the first half of this year to decide if they meet the criteria, she said. The commission expects the new program to attract Taiwanese businesspeople who concentrate on overseas operations, she added.
ESG OBJECTIVES: Social and sustainability bonds need guidelines that are slightly different from those for green bonds, SFB Director Sam Chang told the forum
Social bonds and sustainability bonds could be introduced in Taiwan by the end of this year at the earliest, as the Financial Supervisory Commission (FSC) encourages companies to secure proceeds for their environmental or social projects, Securities and Futures Bureau (SFB) Director Sam Chang (張振山) told a forum on Taiwan’s capital market on Friday. The bonds are the commission’s latest effort to provide new tools for companies to raise funds to meet their environmental, social responsibility and governance (ESG) objectives, after allowing them to issue green bonds on the over-the-counter market in 2017. The decision came after FSC Chairman Thomas Huang (黃天牧) in May said that green finance would be promoted as a way for companies to fulfill their social responsibility and create “win-win” situations for the economy and the environment. Unlike green bonds, where the proceeds are to be used on green investment projects such as the development of renewable energy resources and carbon reduction, social bonds are fund-raising instruments for projects that contribute to positive social outcomes, such as helping minorities or social housing, Chang told the 2020 Taiwan Capital Market Forum in Taipei’s Neihu District (內湖) hosted by the Chinese-language Liberty Times (the Taipei Times’ sister newspaper). The proceeds of sustainability bonds are used for projects that simultaneously help the environment and society, Chang said. While the nation’s green bond market has stabilized, with a total of 43 bonds worth NT$115.3 billion (US$3.91 billion) as of Monday last week, the commission expects companies to utilize the two new tools to fuel their ESG projects, he said. Sales of social bonds have grown quickly in the past few years in Europe and the US, which could be attributed to an increasing appetite among investors for responsible investment, while with the COVID-19 outbreak, issuers could use the funds to address pandemic-related issues, such as supporting
Taiwan’s abundant liquidity is the largest niche for the development of the local capital market, and effective use of the funds and directing them into investments would lead to the positive development of the market, Taiwan Stock Exchange (TWSE) chairman Hsu Jan-yau (許璋瑤) said at a financial forum in Taipei on Friday. Hsu told the 2020 Taiwan Capital Market Forum that the nation has ample liquidity, with NT$45 trillion (US$1.53 trillion) held by banks, NT$30 trillion by insurance companies, NT$42 trillion in the capital market and a massive sum in the social insurance system. However, only NT$1 trillion in funds is being used for real investment, so how to help insurance firms digest their excess liquidity must be addressed, he said. Forty percent of listed companies have reported rising revenues this year, and 385 of the listed companies have posted dividend yields higher than 4 percent, despite the challenging economic conditions worldwide, he said. “This [Taiwan] is a very solid market, which is why foreign funds have kept coming in,” Hsu said. The TWSE opened in 1962 with 18 listed companies and a combined market capitalization of NT$6.8 billion. In 1980, there were 102 listed firms with a combined capitalization of NT$219.1 billion. In 1995, 347 listed firms generated a combined market capitalization of NT$5.1 trillion, with 46 firms related to the electronics industry. As of June, the TWSE had 944 listed companies — including 410 electronics firms — with total market capitalization of NT$35.4 trillion, exchange data showed. As more than 60 percent of funds in the local market are held by the electronics industry, and 38 percent are related to semiconductor companies, there is a problem of excessive concentration of market liquidity in certain industries, Hsu said. The economy is export-oriented and most electronics makers focus on intermediate products, therefore any market disturbance globally is
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