Polaris MF Global Futures Co (寶來曼氏期貨) shares ended flat yesterday after the company reiterated that its operations remained unaffected by the bankruptcy of MF Global Holdings Ltd, the troubled US financial derivatives broker that holds a nearly 20 percent stake in the local firm.
MF Global owns a 19.5 percent stake in Polaris Futures, but the stake will drop to 11.02 percent in April next year when Polaris integrates with Yuanta Futures Co (元大期貨) through a share swap.
MF Global does not have any control over Polaris Futures’ daily operations or policymaking, the local firm said, adding it was too early to speculate about a board reshuffle as the bankruptcy filing unfolds.
Under its bankruptcy petition, the US firm cannot dump shares in the Taiwanese company, but it must seek a buyer to take over its assets, Polaris Futures said.
“That explains why the shares of Polaris Futures were steady in Taipei trading [on Wednesday],” outperforming the TAIEX and the financial sub-index, which fell 0.31 percent and 2.01 percent respectively, a Polaris Futures official said.
The official said the company received several inquiries from buyers interested in its shares before the bankruptcy filing was made public on Monday.
Polaris Futures does not own any MF Global shares, so its assets will not have to be devalued as can sometimes happen, the firm said.
The company reported NT$396.16 million (US$13.15 million) in net income for the first nine months of this year, up 80 percent from the same period last year, thanks to soaring profits from trade in financial derivatives, company data showed.
The showing translated to earnings per share of NT$3.02, outshining peers.
The bankruptcy filing will not affect Polaris Futures’ trading or jeopardize its customers’ funds, which are kept in separate accounts protected by the laws of different countries, the company said.
The Financial Supervisory Commission said on Tuesday a preliminary check found no exposure linked to MF Global on the part of domestic financial institutions. Last night the commission said a preliminary check found no investment or loans linked to MF Global on the part of domestic banks or life insurance firms.
The financial regulator is expanding the survey and would publish the findings once they are available, commission Secretary-General Lin Tung-liang (林棟樑) said by telephone.
However, some banking institutions helped customers purchase NT$19 million of financial products created by MF Global, the statement said
MF Global, the first Wall Street casualty of Europe’s sovereign debt crisis, is not likely to wreak similar havoc on the world as the bankruptcy of Lehman Brothers did in 2008 due to the former’s smaller size, Lisa Coleman, a fixed income specialist at JPMorgan Asset Management, told a media briefing in Taipei yesterday.
“I don’t think MF Global will cause the same ripple effect as Lehman Brothers because it is a smaller institution,” Coleman said. “JPMorgan has no exposure to MF Global.”
MF Global amassed US$6 billion in debt issued by financially distressed European countries such as Italy, Spain and Portugal.
JPMorgan expects the global economy to see sluggish growth of zero to 2.5 percent next year, while inflation would average 2 percent, Coleman said.
The fund manager put the chance of a double-dip recession at 20 percent, making a fresh round of quantitative easing unnecessary in the absence of more concrete downside risks in the US.
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