March 13 (Bloomberg) -- Cathay Financial Holding Co., Taiwan’s largest publicly traded financial holding company, rose the most in more than two months on potential investment negotiations with Chinese banks.
The stock climbed by the daily limit, rising 6.9 percent to NT$34.90, the most since Dec. 23. It was the biggest gainer on the MSCI Taiwan Index. Volume reached 54 million shares, more than triple Cathay Financial’s three-month daily average.
“We are looking for partners who will help us to expand our operations in China, especially those with nationwide networks,” Alan Lee, a spokesman for the Taipei-based company, said today. Lee declined to say how many or which Chinese lenders the company is in talks with.
Taiwan and China signed an agreement in 2010 to cut tariffs and increase access to banking, insurance and securities industries after relations improved with the 2008 election of President Ma Ying-jeou. Finance companies in Taiwan are asking the domestic regulator to lift the 5 percent limit on ownership by a single Chinese investor to help boost business overseas.
“Right now, it isn’t enough to attract Chinese lenders as they can’t do much with a 5 percent stake,” said Eric Chang, an analyst at Jih Sun Securities Co. in Taipei. “Taiwan financial companies want a Chinese partner to help them to make inroads in the mainland market as they lack the distribution networks.”
Taiwan is urging its financial industry to consolidate. The market now hosts 37 domestic banks, 28 foreign lenders and more than 300 credit associations competing to serve 23 million people.
The Economic Daily News earlier reported that Cathay Financial is seeking cross-shareholdings with Chinese banks, citing Chairman Tsai Hong-tu.
To contact the reporters on this story: Janet Ong at firstname.lastname@example.org
To contact the editor responsible for this story: Chitra Somayaji at email@example.com