Fitch: Yuanta unchanged

Fitch Ratings said the planned divestment of Kim Eng Holdings Ltd. is neutral to Yuanta Group's ratings.

The earnings contribution from Kim Eng to the group is moderate, the agency said, and the divestment is intended to achieve optimal capital efficiency by allowing the group to pursue its aspirations in the rapidly-growing Greater China market.

Yuanta Group, through its principal securities unit, Yuanta Securities Co., Ltd., held a 29.19% stake in Kim Eng. Despite a reasonably good investment return, Yuanta Securities is largely a financial investor in Kim Eng with much less collaboration in cross-border securities businesses, the agency said.

Strategic investments are more desirable than the financial investment like Kim Eng as the former may capitalize on Yuanta Securities' competitive niche and reinforce its market position in the Greater China region, Fitch said.

Yuanta's shift of focus from Southeast Asia to Greater China makes strategic sense as the Greater China region offers high growth potential, the agency said, and business enterprises in Taiwan, Hong Kong and China are all highly connected through investment or business relationships.

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