The latest earnings report from Over The Counter (OTC) securities firms demonstrate, yet again, that the repercussions from last month's earthquake have taken a heavy toll on the securities industry.
According to the report, the total loss of pre-tax earnings of six of the top ten securities companies amounted to NT$18.24 billion in September. Further, excluding pre-tax earnings, total losses incurred by the nearly 300 securities companies in Taiwan could have exceeded NT$3 billion in September.
But that's just a preliminary estimate. The total loss caused by the quake could end up being significantly higher as the aftershocks in the securities market have not yet finished. Stock price corrections, delays in underwriting cases, and possible shrinkages in trading volume will all have an impact on the profitability of the securities industry.
The biggest losers among the top ten securities firms were Core Swire Securities (
Nevertheless, despite all the gloom, some securities companies continued to make a profit in September. National Securities made NT$81 million and Masterlink (
The four day closure of the stock market following the earthquake on Sept. resulted in a loss of at least NT$400 billion from lower trading volume. The first two trading days after it was reopened were also very close to being a market-close situation, with trading volume of only NT$10 billion a day. That meant a further loss for the brokerages of NT$200 billion. With this year's average trading volume per day standing at between NT$100 and NT$150 billion, the total loss in brokerage commissions during the six days following the quake amounted to between NT$855 million and NT$1.28 billion.
But the reduced brokerage commissions were only part of the loss generated by the quake. Many securities firms, especially those located in the middle of the island, also had to contend with damaged trading facilities and equipment.
Though no exact estimate of the losses has yet been made a figure of at least several hundred million NT dollars is being considered a reasonable estimate.
Further, many of the larger securities companies may incur significant losses in their stock holdings. With each of them holding an investment of at least NT$400 million in local stocks, many companies faced heavy losses following the nearly 7 percent drop in the stock price index in the first three trading days after the quake. Total losses incurred would be hard to calculate, but a minimum of NT$1 billion is a fair estimate.
In a kind of domino effect, this instability in the stock market has encouraged many unlisted companies to consider postponing their plan to list on the market. The delays or postponements will translate into losses for the underwriting departments of dozens of securities companies.
Excluding this possible loss of potential revenue a low estimate of the total cost from lost revenue and asset damage for the securities companies during September would be NT$3 billion.
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