TAIPEI: Losses incurred by the nation’s securities brokerages last month expanded 761.79 percent from the previous month to NT$1.76 billion (US$53.88 million), as shares were hamstrung by the global stock market rout, according to Taiwan Stock Exchange (TWSE) data.
Last month, the TAIEX slumped 5.66 percent, or 490.42 points, and market turnover contracted 0.98 percent from July, causing local brokerages’ income from fees to drop 2.81 percent, or NT$1.1 million, from the previous month and leading to about NT$3 billion losses in proprietary trading business, the TWSE said in a statement on Wednesday.
Among brokerages, 30 reported profits last month, while 48 were in the red, the stock exchange said.
In the first eight months, the securities brokerage sector reported aggregate net income of NT$12.71 billion, down 25 percent from a year earlier, it said.
However, fees income declined by 12 percent year-on-year in the eight-month period, while there was NT$4.2 billion less in profit for proprietary trading and an NT$800 million drop in profit for underwriting business over the same period, the stock exchange said, adding that market turnover at the local bourse contracted 3.62 percent annually.
To rejuvenate the sluggish stock market, legislators have put yet another revision to the capital gains tax on stock transactions at top of the agenda and investors are watching closely how politicians will deal with the issue ahead of next year’s presidential and legislative elections.
The benchmark TAIEX closed 1.35 percent higher and the over-the-counter TPEX edged up 0.78 percent yesterday ahead of a decision by the legislature today over whether to pass the third reading of amendments to the Securities Transaction Tax Act and the Income Tax Act, or refer them for cross-party negotiations, which would mean they could be put on hold for up to one month.
Investors this week have been reluctant to make significant bets on local shares ahead of the decision, while the Taiwan Securities Association said the tax burden for Taiwanese investors is greater than that for regional peers.
The association said in a statement on Tuesday that the nation’s tax burden could be a disincentive to investors, as the individual income tax is poised to rise from 40 percent to 45 percent this year, while tax exemptions on dividend income is expected to be halved.
In comparison, Hong Kong and Singapore do not impose taxes on dividend income, while China’s dividend tax is 20 percent, with investors eligible to have the tax halved if they hold on to dividend paying stocks for more than one month, and exempted if held for more than a year, the association said.
The association said the government should reconsider the way social welfare programs are funded and cease levying supplementary National Health Insurance and long-term care insurance premiums on stock dividends.
