Preface

The financial market is abuzz as four major financial stocks—Cathay Financial (2882-TW), CDF Financial Holdings (2883-TW), Fubon Financial (2881-TW), and Yuanta Financial Holdings (2885-TW)—prepare for dividend withdrawals next week. However, the rapid appreciation of the New Taiwan Dollar (NTD) has sounded alarm bells for insurers facing heavy foreign exchange losses. On the 27th, the NTD surged over 2.5 cents, threatening the 28 NTD per USD mark. This development has led to concerns regarding the financial performance of life insurers for June and has resulted in widespread selling pressure.

Lazy bag

The NTD's rapid rise threatens financial stocks dealing with foreign exchange losses. Selling pressure mounts as 4 major financial stocks prepare for dividend withdrawals next week.

Main Body

Amid an unpredictable exchange rate landscape, four Taiwanese financial stocks are set to proceed with dividend withdrawals next week. Cathay Financial, CDF Financial Holdings, Fubon Financial, and Yuanta Financial Holdings are the stocks in focus as economic analysts and investors weigh the impact of the recent surge in the NTD.

These companies have announced respective ex-dividend dates and dividend payouts. Cathay Financial plans a cash dividend of 3.5 NTD per share with the ex-dividend date slated for June 30th, and payout scheduled on July 28th. CDF Financial Holdings intends to pay a cash dividend of 0.85 NTD and a stock dividend of 0.1 NTD, with an ex-dividend date also on June 30th and payments by July 30th.

July 1st marks the ex-dividend date for Fubon Financial, distributing 4.25 NTD cash dividend plus 0.25 NTD stock per share, payable on July 31st. Similarly, Yuanta Financial follows suit with a 1.55 NTD cash and 0.3 NTD stock dividend, indicating payout on July 23rd.

The stock market has reacted nervously to these announcements amidst the NTD's appreciation. Fubon Financial saw a minor decrease, hitting an intraday low of 85.1 NTD. Cathay Financial also experienced volatility with prices dipping to 66 NTD. CDF Holdings recorded under 1% loss, bottoming at 16.1 NTD, while Yuanta hovered at 33.55 NTD, barely maintaining its level.

When assessing dividend yield based on June 26's closing prices, CDF boasts a yield of 5.28%, Cathay is at 5.26%, Fubon at 4.96%, and Yuanta at 4.56%. This dividend season aligns with shareholder meetings and high-interest ETF trade rotations, promoting strong stock movements across financial sectors, achieving new height records for several financial stocks. Despite this, the mounting pressure from anticipated dividend laying and selling remains significant.

Conversely, Taiwan's Chinatrust Financial is experiencing unprecedented support from local institutionals, posting continual record highs with prices touching 44.75 NTD. However, the NTD's substantial appreciation against the USD, up almost 7% in May, threatens these gains. Insurers face foreign exchange losses, with the Insurance Bureau reporting pre-tax losses reaching 106.6 billion NTD in May for the insurance industry—a bleak record since statistics began in 2020.

Amid quarter-end accounting season peaks, the NTD's exchange rate strengthened once more, boldly crossing the 29 NTD per USD threshold, with a rapid surge to 28.956 NTD—a three-year two-month peak. The market remains wary, fearing that life-insurance-based financial companies' June fiscal statements may face unfavorable impacts.

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