The benchmark TAIEX yesterday plunged to its lowest level since September 2006, led by a sell-off of financial stocks as investors grew nervous about local financial institutions’ combined exposure of more than NT$600 billion (US$19.74 billion) to US mortgage lenders Fannie Mae and Freddie Mac.
The index ended 322.72 points, or 4.51 percent, lower at 6,834.24, the lowest close in the past 22 months. Turnover was NT$107.516 billion in yesterday’s session, an increase of 13 percent from the previous day’s NT$94.871 billion, the Taiwan Stock Exchange’s tallies showed.
The TAIEX’s Banking and Insurance sub-index closed 5.8 percent lower in yesterday’s trading, led by a 6.97 percent drop in Cathay Financial Holding Co (國泰金控) to NT$58.7. Shin Kong Financial Holding Co (新光金控) and Fubon Financial Holding Co (富邦金控) were also limit-down to NT$17.8 and NT$25 respectively, the stock exchange’s data showed.
The Financial Supervisory Commission (FSC) yesterday urged investors to remain calm, saying that domestic financial and insurance companies would only suffer limited losses from their securities investments issued by Freddie Mac and Fannie Mae, which total NT$616.371 billion.
“Investors shouldn’t worry unnecessarily since it is almost certain that the US government won’t allow these two companies to fail,” FSC Vice Chairwoman Lee Jih-chu (李紀珠) said yesterday.
She also said that the problems the two mortgage firms have encountered are nothing like the subprime mortgage crisis.
She also said that the local financial institutions’ investments in free-falling shares of Freddie Mac and Fannie Mae only took up 0.1 percent of their total investment.
Huang Tien-mu (黃天牧), director of the commission’s insurance bureau, said the nation’s insurance sector had incurred the worst losses of NT$489 million as of the end of last month, out of NT$840 million in shares for these two companies.
The insurance sector, however, expects no losses from its NT$489.6 billion long-term mortgage-backed securities (MBSs) issued by Freddie Mac and Fannie Mae, Huang said.
Domestic insurance companies also invested NT$45 billion in corporate bonds, which aren’t expected to suffer losses, that were issued by the two US mortgage firms, Huang said.
In total, the insurance sector has the biggest investment — NT$535.6 billion in the two companies.
Lee reiterated that there are no signs that ratings on MBSs or bonds issued by the two US companies would be downgraded soon, which she said provided a confidence boost to domestic companies’ US investment prospects.
“The two companies’ financial problems should have a limited impact on the local financial sector,” she said.
Wu Tang-chieh (吳當傑), director-general of the FSC’s Securities and Futures Bureau, said that domestic investment trusts have only suffered NT$880,000 in losses from their US$40 million in MBS-related investments as of early last month.
Director-general of the FSC’s banking bureau Chang Ming-daw (張明道) said that domestic banks have invested NT$77.2 billion in MBSs issued by the two US companies and another NT$2.2 billion in their bonds as of last Friday, which he said should incur limited losses.
Also See: Asian stocks plunge on US woes
Also See: Cathay tops links to ailing US firms
SEPARATE: The MAC rebutted Beijing’s claim that Taiwan is China’s province, asserting that UN Resolution 2758 neither mentions Taiwan nor grants the PRC authority over it The “status quo” of democratic Taiwan and autocratic China not belonging to each other has long been recognized by the international community, the Mainland Affairs Council (MAC) said yesterday in its rebuttal of Beijing’s claim that Taiwan can only be represented in the UN as “Taiwan, Province of China.” Chinese Minister of Foreign Affairs Wang Yi (王毅) yesterday at a news conference of the third session at the 14th National People’s Congress said that Taiwan can only be referred to as “Taiwan, Province of China” at the UN. Taiwan is an inseparable part of Chinese territory, which is not only history but
CROSSED A LINE: While entertainers working in China have made pro-China statements before, this time it seriously affected the nation’s security and interests, a source said The Mainland Affairs Council (MAC) late on Saturday night condemned the comments of Taiwanese entertainers who reposted Chinese statements denigrating Taiwan’s sovereignty. The nation’s cross-strait affairs authority issued the statement after several Taiwanese entertainers, including Patty Hou (侯佩岑), Ouyang Nana (歐陽娜娜) and Michelle Chen (陳妍希), on Friday and Saturday shared on their respective Sina Weibo (微博) accounts a post by state broadcaster China Central Television. The post showed an image of a map of Taiwan along with the five stars of the Chinese flag, and the message: “Taiwan is never a country. It never was and never will be.” The post followed remarks
INVESTMENT WATCH: The US activity would not affect the firm’s investment in Taiwan, where 11 production lines would likely be completed this year, C.C. Wei said Investments by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in the US should not be a cause for concern, but rather seen as the moment that the company and Taiwan stepped into the global spotlight, President William Lai (賴清德) told a news conference at the Presidential Office in Taipei yesterday alongside TSMC chairman and chief executive officer C.C. Wei (魏哲家). Wei and US President Donald Trump in Washington on Monday announced plans to invest US$100 billion in the US to build three advanced foundries, two packaging plants, and a research and development center, after Trump threatened to slap tariffs on chips made
CONSISTENT COMMITMENT: The American Institute in Taiwan director said that the US would expand investment and trade relationships to make both nations more prosperous The US would not abandon its commitment to Taiwan, and would make Taiwan safer, stronger and more prosperous, American Institute in Taiwan Director Raymond Greene said. “The US’ commitment to Taiwan has been consistent over many administrations and over many years, and we will not abandon our commitment to Taiwan, including our opposition to any attempt to use force or coercion to change Taiwan’s status,” he said in an exclusive interview with the Liberty Times (the sister newspaper of the Taipei Times) on Friday last week, which was published in the Chinese-language newspaper yesterday. The US would double down on its efforts
RSS