The Federal Reserve will continue to grow, but the financial sector has no sweetness to taste. The first three quarters of profits from listed OTC financial holdings fell by more than 30% compared to the same period last year. The recession could reduce corporate investments and affect the profitability of financial holdings.
According to statistics, 15 financial holding companies made profits in the first nine months.The total net profit after tax was only 322.3 billion yuan, a 35% decline on an annual basis, the profit after-tax of Cathay Pacific Gold in the first three quarters were 54.18 billion yuan, an annual decline of more than 50%; Mega Gold, which has better profitability in public financial holdings, also saw a 30% annual decline in its first three quarters of profit.
The US Federal Reserve’s CPI (Consumer Price Index) hit its 40-year high in September and persistently high inflationary pressure is set to allow the Federal Reserve to continue to raise interest rates strongly and may even raise rates of interest to prime in next year (2023). The Federal Reserve’s hawkish remarks accelerated the withdrawal of funds from the stock market, dragging down stock market volatility and pulling back.
According to a Taiwan Institute of Financial Studies survey, the US Federal Reserve raised interest rates again by 3 yards to fight inflation in September, and the CPI continued to hit a new high in 40 years. that the Federal Reserve will continue to raise interest rates in November, pessimism has intensified and the stock markets of various countries have fallen sharply.
The survey found that due to the Federal Reserve’s aggressive interest rate hike, Taiwan’s equity fear index (Taiwan VIX) has risen to a new high since March 2021 and overseas market risks have reached a new high since the outbreak of the May 2020 outbreak.
As the market continued to raise interest rates this year, it also affected the investment performance of banks and insurance companies According to the Financial Regulatory Commission statistics, as of the first half of this year, under the impact of the stock retreating market and recovering bond yields, investment valuations in the second quarter alone suffered losses: up to 873.3 billion yuan, accumulated losses amounted to 828.7 billion yuan and the amount of losses caused reached a record level.
Rising interest rates triggered a contraction in the stock market and a rebound in bond yields, making it more difficult for banks to operate financially. banks, burying variables for the performance of banks’ profits in the second half of the year.
