The Federal Reserve will continue to rise, but the financial industry has no sweetness to taste. The first three quarters of listed OTC financial holdings’ profits have dropped by more than 30% compared with the same period last year. The recession may reduce corporate investment and impact 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 year-on-year decrease of 35%. %, Cathay Pacific Gold’s after-tax net profit in the first three quarters was 54.18 billion yuan, an annual decrease of more than 50%; Mega Gold, which has better profitability in the public stock financial holdings, also saw an annual decrease of 30% in the first three quarters of profit.
The U.S. Federal Reserve’s CPI (Consumer Price Index) hit a 40-year high in September, and the persistently high inflation pressure is bound to allow the Federal Reserve to continue to raise interest rates strongly, and may even raise interest rates all the way to the first in the next year (2023). The hawkish remarks of the Federal Reserve accelerated the withdrawal of funds from the stock market, dragging down the stock market volatility and pulling back.
According to a survey by the Taiwan Institute of Financial Studies, the US Federal Reserve raised interest rates again in September by 3 yards to fight inflation. The CPI continued to hit a new high in 40 years. The market expects that the Federal Reserve will continue to raise interest rates in November. The pessimism intensified, and the stock markets of various countries fell sharply.
The survey pointed out that due to the aggressive interest rate hike by the Federal Reserve, the fear index of Taiwan stocks (Taiwan VIX) has surged to a new high since March 2021, and overseas market risks have reached a new high since the outbreak of the epidemic in May 2020.
As the market continues to raise interest rates this year, it has also hit the investment performance of banks and insurance companies. According to the statistics of the Financial Regulatory Commission, as of the first half of this year, under the impact of the stock market pulling back and bond yields rebounding, investment evaluations in the second quarter alone lost. As high as 873.3 billion yuan, the cumulative loss totaled 828.7 billion yuan, and the amount of loss reached a record high.
The rise in interest rates has triggered a pullback in the stock market and a rebound in bond yields, making it more difficult for banks to operate financially. The rise in interest rates accompanied by an economic recession may also impact banks’ lending momentum, burying variables for banks’ profit performance in the second half of the year.