The local financial sector extended gains yesterday from the previous trading session, as buying continued as a result of optimism toward fund injections after the government announced it would allow Chinese banks to take a stake in their Taiwanese counterparts, dealers said.
The buying spree came from institutional investors scrambling to take advantage of low valuations of local financial stocks, which had been hard-hit by fears of their exposure to the debt in the eurozone, the dealers said.
The sub-financial sector index closed up 1.9 percent yesterday, while the TAIEX remained flat at 6,966.35 points from the previous day’s rally.
“The long-awaited market liberalization has triggered strong interest from institutional investors, in particular from foreign institutional investors and local life insurance companies,” Horizon Securities Co (宏遠證券) analyst Benson Huang (黃重善) said.
“The move to allow Chinese banks to acquire stakes in Taiwanese financial entities is expected to provide the local financial sector with large funds for future expansion,” Huang said.
The Financial Supervisory Commission (FSC) said on Tuesday that Chinese banks could acquire up to 5 percent of a local bank or financial holding company.
In collaboration with qualified domestic institutional investors (QDII) from China, the total stake they can own in a Taiwanese financial entity may not exceed 10 percent.
In addition, the Ministry of Finance said a day later that Chinese banks are welcome to become shareholders in Taiwan-based financial entities in which the Taiwanese government owns a stake.
Cathay Financial Holdings Co (國泰金控) rose 4.01 percent to NT$31.15 (US$1.03) and Chinatrust Financial Holding Co (中信金控) gained 4.86 percent to NT$18.35.
In addition, SinoPac Financial Holdings Co (永豐金控) jumped 6.36 percent to NT$9.2 as the market viewed the company as a target of potential Chinese buyers.
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
MARKET FACTORS: Navitas Semiconductor Inc said that Powerchip is to take over from TSMC as its supplier of high-voltage gallium nitride chips Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday in a statement said that it would phase out its compound semiconductor gallium nitride (GaN) business over the next two years, citing market dynamics. The decision would not affect its financial targets announced previously, the world’s biggest contract chipmaker said. “We are working closely with our customers to ensure a smooth transition and remain committed to meeting their needs during this period,” it said. “Our focus continues to be on delivering sustained value to our partners and the market.” TSMC’s latest move came unexpectedly, as the chipmaker had said in its annual report that it has
Rick Cassidy, the chairman of Taiwan Semiconductor Manufacturing Co's (TSMC, 台積電) US subsidiary, TSMC Arizona Corp, plans to retire, but the company has yet to name a successor. After Cassidy made his intention to retire known, TSMC Arizona held a special general meeting and approved a resolution that Cassidy would not continue as chairman and would not remain as a director, TSMC said in a statement filed with the Taiwan Stock Exchange last night. The meeting also approved a plan to appoint TSMC Arizona president Rose Castanares as a director, the company said, adding that Cassidy has been named as an advisor
SECURITY WARNING: The company possesses key 3-nanometer technology, and Taiwan should prevent it from being transferred to China, a lawmaker said The Ministry of Economic Affairs yesterday said it would conduct a “strict review” of any proposed acquisition of Taiwanese tech company Source Photonics Co (索爾思光電), following media reports that a Chinese firm was planning to buy the company in the Hsinchu Science Park (新竹科學園區). Local media reported that Suzhou Dongshan Precision Manufacturing Co (東山精密), China’s largest printed circuit board manufacturer, had announced plans to acquire Source Photonics for 5.9 billion yuan (US$823.1 million). The ministry said it has not received an application from Source Photonics and has formally notified the company that any buyout would constitute a change in its ownership structure. The
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