Financials extend losses on uncertainty over China trade pact
Central News Agency
2014-03-20 12:21 PM
Taipei, March 20 (CNA) The local financial sector extended losses from a session earlier Thursday amid rising uncertainty over the fate of a trade-in-services agreement with China, dealers said. Investors dumped financial stocks at a time when protesters, mostly students skeptical of the trade pact signed by Taiwan and China in June 2013, have occupied the Legislative Yuan. The investors fear that a delay of the implementation of the trade agreement will hurt financial firms' profitability, the dealers said. As of 11:42 a.m., the financial sub-index had fallen 1.21 percent to 980.69 points on the Taiwan Stock Exchange, where the weighted index had lost 1.09 percent, dropping to 8,594.99 points. Among the losing financial stocks, Cathay Financial Holding Co. had shed 1.14 percent to NT$43.35 (US$1.42) with 12.04 million shares changing hands, while Fubon Financial Holding Co. had lost 1.57 percent to NT$40.70 on trading volume of 13.90 million shares. Mega Financial Holding Co. had dropped 1.29 percent to NT$22.95, while Yuanta Financial Holding Co. had shed 1.62 percent to NT$15.15. "Judging from the losses suffered by the financial heavyweights, I suspect that selling came largely from institutional investors due to the uncertainty over the trade agreement," Grand Fortune Securities analyst Chen Wei-tai said. "Many investors are afraid that if the political standoff escalates, the implementation of the trade agreement could be postponed indefinitely, so they preferred to take the money and run for the moment to avoid further losses down the road," Chen said. Cathay Financial President Lee Chang-ken said a day earlier that his company hopes the trade pact will be passed as soon as possible, as the agreement will help the local financial sector to extend its reach out of Taiwan, where the financial market is saturated. Lee said the trade agreement is expected to lend support to Taiwan's securities and banking businesses, which are eager to set up footholds in the huge China market. Chou Po-chiao, president of First Commercial Bank under First Financial Holding Co. agreed, saying that banks from elsewhere such as Singapore, the United States and Europe have set up branches in China's rural areas, while Taiwanese counterparts have lagged behind. Chou said that only if the trade-in-services agreement is passed will Taiwan's banks be able to speed up the pace of penetration into the China market. First Bank aims to set up outlets in villages in Henan Province. "There have been concerns that if the trade-in-service agreement is blocked, Taiwan's ongoing talks with China in a trade-in-goods agreement will be impacted, which could hurt cross-Taiwan Strait economic exchanges," Chen said. "I am not optimistic that the political standoff will be resolved any time soon," Chen added. (By Tien Yu-pin and Frances Huang)
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