Citibank Taiwan (台灣花旗) painted a rosy picture yesterday for business this year, saying that equities, corporate financing and investment banking business demand are growing in light of policy deregulations after next month's presidential election.
"We think that a more liberalized policy toward China after the presidential election will push up policy-related shares," said William Liang (梁維仁), head of Citi's equities department in Taiwan.
Taiwanese stocks are relatively cheap compared to other markets which had enjoyed sharp gains over the past few years, he said.
The uncertainty of the US subprime mortgage crisis on global markets has attracted local investors to channel their overseas investments back to Taiwan, he said.
However, individual stock performance will vary, depending on whether a company's earnings prospects will be hurt and also on increases in labor costs or taxation burden, Liang said.
expectations
"After the election, if policies are moving toward a more open and free direction, we will see a significant increase in corporate fundraising activities," said Y. T. Du (杜英宗), chairman of Citi's Global Investment Banking in Asia-Pacific.
He was optimistic about merger and acquisition business growth in Taiwan this year.
"Private equity funds and global conglomerates are all very interested in Taiwanese enterprises, especially those that have major operations in China," Du said.
"Low evaluation, abundant liquidity and superb corporate governance make Taiwanese companies the apples in those global players' eyes," he said.
M&A
Commenting on the scenario for more consolidation in Taiwan's banking industry, Du said market forces will do the job of a "second financial reform."
"Stay tuned," Du said.
"To make a profit, foreign banks which have sought to increase their presence here via acquisitions will not stop there, while local banks also need to expand their scale to get ready for competing in the China market," he said.
Du also expects the original-design manufacturers (ODM) for PCs, cellphones and laptop PCs in Taiwan to see some consolidation amid keen competition.
Citi celebrated record-high profits in Taiwan last year, reaping NT$13.26 billion [US$422.5 million] in earnings before tax, up 173 percent year-on-year.
Following the acquisition of the Bank of Overseas Chinese (BOOC,
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