ETF mandatory buying pressure shows strength! Taishin Shin Kong Financial (2887) surges 5.99% in a single day, with the financial holding group collectively strengthening to a record high

Taiwan stocks opened on December 17, with the financial holding sector showing strong momentum. The financial and insurance stock index rose more than 2% intraday, reaching a new all-time high of 2412.7 points. Among them, the market focus was on Taishin Shin Kong Financial(2887), which was selected as a constituent stock of the Yuanta Taiwan High Dividend ETF. Driven by capital inflows, the stock price jumped nearly 7% at one point, breaking the 21 yuan mark, reaching a high of 21.60 yuan, and closing at 21.25 yuan, a daily increase of 5.99%, setting a new record high.

ETF adjustments trigger chain reactions, institutional investors pre-positioning to build positions

Recently, several Taiwan stock ETFs have undergone constituent adjustments, hiding the deployment of hundreds of billions of yuan in funds. The Yuanta Taiwan High Dividend ETF, with a scale of over 400 billion yuan, added Taishin Shin Kong Financial as a constituent stock, effective from December 16. The subsequent eight trading days of transition period for building positions have become the market’s focus.

Institutional investors saw the opportunity early and made large purchases, buying 136,000 shares on December 16 alone, pushing the stock price out of its decline and turning red significantly. The trading volume on that day exceeded 430,000 shares. On December 17, buying momentum continued without interruption, with a cumulative trading volume of 490,000 shares before noon, surpassing the entire previous day’s trading volume. Market observers pointed out that the force of forced buying could create a short-term upward trend, but the pace of institutional building positions varies. If subsequent capital inflows slow down, the stock price may face downward pressure.

Financial holding companies all achieve success, multiple large-cap stocks hit new highs

The strong performance of the financial holding sector was not limited to Taishin Shin Kong Financial. E.Sun Financial’s rise exceeded 3%; CTBC Financial and Cathay Financial performed even better, both rising over 4%. Among them, Cathay Financial(2882) reached 73.2 yuan, hitting a new high since June 2008. Additionally, KGI Securities increased by over 2%; Yuanta Financial and Fubon Financial rose more than 1% respectively. Fubon Financial(2881) reached a high of 97.9 yuan intraday, continuously rewriting its historical high and approaching the 100 yuan mark.

Spread widening and capital gains driving profit cycle, financial stocks enter prosperity phase

The strong performance of financial stocks is supported by fundamental factors. Institutional data shows that in November, the net profit after tax for financial stocks reached 59.087 billion yuan, a significant increase of 71% compared to the same period last year. This profit energy mainly comes from the life insurance industry realizing more capital gains, banks’ net interest and fee income growth, and the booming securities brokerage business driven by active stock market trading.

Looking ahead for the full year, Macro Yuan Investment Consulting analyzed that the cumulative profit of financial stocks in the first ten months was 5,065 billion yuan, a slight decline of over 5% compared to the same period last year. In the first half of the year, asset impairments were severe due to the strong appreciation of the New Taiwan dollar; in the second half, with the depreciation of the New Taiwan dollar and rising stock and bond prices, full-year profits are expected to match last year’s level. As the interest rate environment stabilizes, the net interest margin of banks and the hedging costs of life insurance may improve, and profit prospects are gradually turning optimistic.

Dividend expectations doubtful, 2026 dividends may be lower than this year

However, the market also needs to be cautious about future developments. Institutional investors pointed out that life insurance companies are required by regulations to set aside 30% of their pre-tax profits for the foreign exchange fluctuation reserve in December. This obligation may lead to an increase in reported losses in the monthly financial statements. Therefore, for financial holdings whose main profit source is life insurance business, their ability to distribute cash dividends next year still needs careful assessment. Market expectations are that overall financial holdings’ dividends in 2026 may be slightly lower than those in 2025.

With the Christmas holiday approaching, foreign capital’s defensive sentiment is rising. Financial stocks with relatively low bases and stable dividend payout expectations have become the preferred assets for capital to flow into, continuing to push the sector higher.