Prof­itabil­ity of pub­licly traded firms grows in 2014

The China Post - - TAIWAN BUSINESS - BY JOHN LIU

Com­pa­nies listed on the Tai­wan Stock Ex­change Cor­po­ra­tion ( TSEC) grew 5.42 per­cent in terms of rev­enues for 2014, while firms listed over the counter ( OTC) grew 6.92 per­cent, ac­cord­ing to a re­port re­leased by the Fi­nan­cial Su­per­vi­sory Com­mis­sion ( FSC). TSEC- listed com­pa­nies raked in NT$ 28.333 tril­lion in 2014, which rep­re­sented a 5.42- per- cent growth year- on- year. Earn­ings be­fore tax also surged 15.57 per­cent.

Cor­po­rate rev­enues and prof­its grew largely be­cause of a boom­ing semi­con­duc­tor in­dus­try and its re­lated ap­pli­ca­tions, which then fu­eled elec­tron­ics parts and com­po­nents pro­duc­tion, said the FSC’s re­port.

In ad­di­tion, lo­cal fi­nance and in­sur­ance com­pa­nies reaped higher prof­its as ral­ly­ing stock mar­kets over­seas of­fered greater re­turn on in­vest­ment.

While semi­con­duc­tor, elec­tron­ics and fi­nance in­dus­tries pros­pered, trade of gen­eral mer­chan­dise and the plas­tic in­dus­try saw sub­stan­tial decline last year.

OTC- Listed Com­pa­nies

Over- per­formed

OTC- listed com­pa­nies drew in NT$ 1.8936 tril­lion in 2014, rep­re­sent­ing a 6.92- per­cent an­nual growth. The com­pa­nies’ earn­ings be­fore tax, on the other hand, soared 29.48 per­cent.

The FSC at­trib­uted the rise to a strong semi­con­duc­tor de­mand, a so­lar in­dus­try that is edg­ing to­ward its high sea­son, and higher back­light mod­ule and bat­tery mod­ule ship­ments.

Ac­cord­ing to the FSC, the semi­con­duc­tor, op­to­elec­tron­ics, and com­puter in­dus­tries saw the high­est earn­ings last year, while the chem­i­cal, bio­med­i­cine and con­struc­tion ma­te­rial in­dus­tries

saw more set­back.

TWSE Chair­man Weighs in

The gov­ern­ment is set to loosen the stock price fluc­tu­a­tion cap in June, from 7 per­cent to 10 per­cent in a given trad­ing day. The new pol­icy is ex­pected to hike up trad­ing vol­ume.

TWSE Chair­man Lee Sush-der ( ) said most over­seas stock mar­kets are al­ready per­mit­ted to see 10-per­cent or higher stock fluc­tu­a­tion. Tai­wan should not miss this trend, Lee said.

Although the lo­cal stock mar­ket has seen great struc­tural change in the past two years, trad­ing vol­ume as well as prices still lags be­hind those in Hong Kong and Shang­hai mar­kets, said the TWSE chief.

Ac­cord­ing to Lee, trade vol­umes fell in the last cou­ple of years, and he at­trib­uted the phe­nom­e­non to lo­cal un­fa­vor­able tax rules and more in­ter­na­tion­al­ized for­eign ex­changes that lured Tai­wan’s cap­i­tal away. Lee said lo­cal trad­ing in 2014 dropped 26 per­cent from that in 2009.

The num­ber of TWSE- and OTClisted com­pa­nies com­bined has reached more than 1,700, while the num­ber of un­listed com­pa­nies is 1.3 mil­lion or so.

Ef­fec­tive cor­po­rate gov­er­nance, their em­pha­sis on so­cial re­spon­si­bil­ity and con­ver­sion with in­vestor public, and a trans­par­ent stock ex­change plat­form, are among the key fac­tors to connect play­ers in a sup­ply chain and to en­able eco­nomic growth, said Lee.

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