Cathay, Fubon outperform index after going ex-dividend

07/03/2017 04:00 PM

Taipei, July 3 (CNA) Shares in Cathay Financial Holding Co. (國泰金) and Fubon Financial Holding Co. (富邦金) moved higher, outperforming the broader market on Monday after going ex-dividend, dealers said.

The gains posted by the two leading financial holding companies helped the local main board fend off selling in many electronics stocks caused by volatility among high-tech stocks on Wall Street. It was also one of the factors that prevented the weighted index from closing in negative territory, they said.

Shares in Cathay Financial rose 1.04 percent to close at NT$48.60 and shares in Fubon Financial gained 0.86 percent to end the day at NT$46.85 on the Taiwan Stock Exchange, where the weighted index closed up 0.17 percent at 10,412.79 points.

The two financial stocks attracted buying soon after the local equity market opened Monday, while the weighted index fell, led by the electronics sector, reflecting losses suffered by high-tech stocks in the U.S. market on Friday.

Market analysts said that many of the investors who rushed to pick up the two stocks believe their share prices will quickly return to pre ex-dividend levels on the back of their strong bottom lines.

Cathay Financial's reference opening price was NT$48.10, which was NT$2 lower than the closing price on Friday, with the reduction in share price equivalent to its cash dividend per share on 2016 earnings.

Fubon Financial's reference opening price was set at NT$46.45, also a cut of NT$2 and equivalent to the company's cash dividend payout on 2016 earnings.

Cathay Financial shares even hit an interaday high of NT$48.65, which meant it made up at one point about 27.5 percent of the NT$2 price cut due to going ex-dividend, while Fubon Financial hit an early high of NT$47, which helped the stock make up at one point about 27.5 percent of the NT$2 price cut.

Analysts said that since listed companies on the local equity market are scheduled to issue cash dividends in the third quarter, Cathay Financial, Fubon Financial and other financial firms that have invested heavily in local equities, will benefit from large cash dividend payments.

Fubon Financial and Cathay Financial are expected to receive NT$5-NT$10 billion in cash dividends each in the third quarter, helping them overcome the impact of foreign exchange losses, which were particularly high in the first quarter when the Taiwan dollar rose about 6 percent against the U.S. dollar.

On Friday, trading volume in Fubon Financial and Cathay Financial hit 36 million and 29 million shares respectively, indicating that investors are willing to hold onto the stocks, expecting a recovery in share prices after the two went ex-dividend, analysts said.

In the first five months of this year, Cathay Financial ranked as the top earner among the 15 listed financial holdings, posting NT$19.23 billion in net profit or NT$1.51 in earnings per share, followed by Fubon Financial, whose net profit totaled NT$15.39 billion with EPS at NT$1.5.

(By Tien Yu-pin and Frances Huang)

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