Taipei, Securities companies operating in Taiwan reported a month-on-month decline of more than 90 percent in earnings for February due to low turnover as a result of the six-day Lunar New Year holiday, according to the Taiwan Stock Exchange (TWSE).
The TWSE, which operates the local main board, said the sharp drop in earnings also reflected caution among investors in Taiwan, who were shocked by the volatility on Wall Street amid rising fears over an interest rate hike in the United States.
In February, securities firms in Taiwan reported NT$427.63 million (US$14.49 million) in net profit, down 91.76 percent from January, when their earnings stood at NT$5.19 billion, TWSE data showed.
Due to the six-day Chinese New Year holiday, there were only 15 trading sessions on the local stock market in February, which lowered turnover by 39.75 percent from a month earlier, according to the data.
Moreover, the Taiex fell 288.32 points at the end of February, or about 2.6 percent from a month earlier, as a volatile Wall Street prompted investors either to dump their stocks or stay away from the trading floor, the TWSE said.
With the Taiex entering consolidation mode as a result, the reduced trading volume led to a month-on-month drop of NT$2.4 billion, or 42 percent, in earnings by securities brokers, according to the TWSE.
The Taiex's drop also led to losses of NT$1 billion loss in proprietary trading operations and NT$300 million in underwriting business, the TWSE said.
Among the 71 securities firms in Taiwan, 33 reported losses, while 38 were profitable in February, the TWSE said.
In addition, it said, 34 integrated securities firms reported a 97.31 percent month-on-month plunge in earnings, which totaled NT$125.16 million, with 21 companies incurring losses and 13 showing profits.
As for the 27 dedicated securities houses, their net profit fell 55.11 percent from a month earlier to NT$83.60 million in February, with 8 suffering losses and 19 reporting profits, the TWSE said.
In Taiwan, integrated securities firms are allowed to engage in a wide range of activities that include brokering trade, proprietary trading and underwriting, while dedicated securities brokers can only broker and engage in trade equities.
In the first two months of the year, securities houses in Taiwan reported NT$5.84 billion in net profit, up 21.7 percent from a year earlier largely on a 25 percent increase in turnover in January, when their earnings rose 45.44 percent year-on-year, the TWSE said.
Fee income among brokers rose 42.27 percent year-on-year in the two months, while earnings posted by underwriting business increased 23 percent from a year earlier, the TWSE said.
Source: Focus Taiwan News Channel