TAIWAN: CB Sees Financial System Stable Despite Broad FX Losses in April
Taiwan's 2025 financial stability report certainly eyed more carefully after recent currency volatility. The report states the insurance sector suffered a TWD 118bln FX loss in April (USD/TWD dropped 3.6% over the month), but losses would have been well over double that on a pre-hedging basis (TWD 322bln), and as such the financial system remains generally stable. Full report for download is here (only available in Mandarin so far): https://www.cbc.gov.tw/tw/cp-899-182554-5fef0-1.html
- Worth noting that the USD/TWD fell further, and more sharply, in early days of May: as much as 7.7% over the course of two sessions - meaning FX losses for insurers were likely of a much higher magnitude as both the spot move and the sharp increase in hedging costs will have eaten into positioning.
- The report acknowledges the life insurance sector, with large domestic & foreign investment positions, faces higher market risks ahead. Implied vols are likely one of these risks - feeding directly into hedging costs and forcing firms to seek more cost effective hedges via the likes of HKD, IDR and KRW - a key driver of the APAC FX vol earlier this month.
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EQUITIES: Societe Generale Risk Reversal
SGE (18/12/26) 28/60RR, bought the call for 0.27 in 1.5k.
CANADA: Liberals To Lead Next Gov't, Conservative Leader Set To Lose Seat
Prime Minister Mark Carney's centre-left Liberal Party has secured a fourth consecutive term in office following an election campaign that has seen one of the most notable changes in fortune in recent Western political history. The Liberals look set to have secured 168 out of 343 seats, an increase of eight from 2021 and four short of an overall majority. Despite the most recent polling and betting market probabilities showing a Liberal majority as the most likely outcome, even retaining top spot will be viewed as a remarkable turnaround for a party that stood ~20-25% behind its centre-right Conservative party (CPC) opponents at the start of the year.
- For the Liberals, the result means forming either a coalition or a confidence and supply agreement. Their options are the regionalist Bloc Quebecois - down nine seats to 23 - or the left-wing New Democratic Party (NDP). The NDP suffered its worst election on record, falling from 25 seats in 2021 to just seven, with party leader Jagmeet Singh losing his riding in Vancouver. The NDP also loses 'official party status', reducing its funding for party research offices and speaking allotment at Question Time.
- For the Conservatives, the election will be viewed as disastrous despite having won the highest share of the vote in its history (41.4%). Indeed, the party's vote share is around the same as it polled at the start of the year when a CPC majority looked all-but-inevitable. However, the collapse of the Bloc/NDP/Green vote, which swung almost wholly behind the Liberals, saw the Conservatives fall short under Canada's first-past-the-post system. Indeed, adding to the ignominy, Conservative leader Pierre Poilievre looks set to lose his Carleton riding on the outskirts of Ottawa.
Chart 1. Partial Federal Election Results, Seats
Source: CBC, MNI
EGB SYNDICATION: Finland 10-year: Spread set
- Spread set at MS+52bps (guidance was MS +54bps area)
- Size: Benchmark (MNI expects E4bln)
- Books in excess of E20bln (inc E875mln JLM interest)
- Coupon: Short first coupon
- Settlement: 7 May 2025 (T+5)
- Maturity: 15 September 2035
- ISIN: FI4000587415
- Bookrunners: BNPP (DM/B&D) / Citi / CACIB / GSBE SE / Nordea
- Timing: Books to close at 10:15BST / 11:15CET
