Taiwan financial shares rose the most in almost two weeks after the island’s central bank relaxed rules on yuan deposits and loans.
Cathay Financial Holding Co., Taiwan’s biggest lender by market capitalization, rose 1.3 percent to NT$32.55 as of 11:15 a.m. in Taipei, the highest in more than three months. Mega Financial Holding Co., the island’s third biggest lender by market value, advanced as much as 1.5 percent. The Taiwan Stock Exchange Financial and Insurance Industry index advanced as much as 1.4 percent, the biggest intraday gain since Jan. 10.
Taiwan’s central bank said Jan. 25 that banks will be allowed to take yuan deposits and make loans in the currency by the Lunar New Year. China, Taiwan’s biggest trading partner, is seeking to facilitate greater use of the currency across the Taiwan Strait and enlarge the yuan’s role in global finance.
“The central bank’s announcement on Friday on yuan business helped bolster sentiment toward local financial stocks,” said Sam Hsieh, a Taipei-based fund manager at Fuh Hwa Securities Investment Trust Co. “Local banks will benefit from handling fees and interest spreads from yuan deposits and loans.”
Under the new rules, individuals would be allowed to deposit as much as 20,000 yuan ($3,200) a day in accounts with local banks and that lenders will be able to conduct yuan business. A cross-strait agreement to facilitate use of the yuan in Taiwan was signed by the two governments in August.