Local financial sector up amid earnings optimism

Recent buying in the sector by foreign institutional investors and impressive results for the first two months reported by several heavyweights also prompted retail investors to chase financial sector shares, they said.

As of 11:23 a.m., the financial sub-index had risen 1.81 percent. The benchmark weighted index on the Taiwan Stock Exchange was up 0.69 percent at 8,015.08.

Among the winning large-cap financial stocks, shares of Fubon Financial Holding Co. were up 2.68 percent at NT$42.10 (US$1.42) after the company reported a net profit of NT$7.19 billion, or NT$0.75 per share, for the first two months, beating a net profit of NT$4.9 billion, or NT$0.54 per share, over the same period last year.

Shares of rival Cathay Financial Holding Co. had gained 1.59 percent to NT$41.60, also because of strong results.

The company reported NT$4.81 billion, or NT$0.44 per share, in net income for the January-February period, sharply higher than the NT$140 million in net profit, or NT$0.01 per share, posted a year earlier.

“Led by heavyweights like Fubon Financial and Cathay Financial, the financial sector extended gains from a session earlier to boost the broader market above the 8,000 mark,” MasterLink Securities analyst Tom Tang said.

“Market attention has shifted to the financial sector from the high-tech sector amid hopes that Taiwan and China will further relax restrictions on financial exchanges and lift the sector's profitability,” Tang said.

Fubon Financial could be one of the major beneficiaries, said Tang, who expected the firm's first quarter net profit to exceed NT$10 billion.

Some market analysts have forecast that Fubon Financial will post a net profit of about NT$40 billion in 2013, compared with NT$28.6 billion last year, as it exploits expanding opportunities in China.

“Financial authorities in Taiwan and China are scheduled to meet later this month. Many investors expect they will come up with more positive leads for exchanges,” the analyst said.

Tang said foreign institutional investors have stayed on the buy side for the financial sector in recent sessions because of the sector's improving profitability.

On Thursday, foreign institutional investors were net buyers of 25.92 million Cathay Financial shares and of 1.49 million Fubon Financial shares.

“Foreign investors have built up long positions in the futures market. They are pushing up the financial sector in the spot market to make gains in futures,” Tang said.

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