Taipei, The organizers of Taiwan's National Financial Stabilization Fund have no immediate plans to intervene in the stock market to prop up share prices, even though the local equity market has suffered heavy losses in recent sessions.
On Friday, the benchmark weighted index on the Taiwan Stock Exchange, or Taiex, fell more than 200 points, or 1.88 percent, to close at 10,517.12 after investors took cues from a plunge on Wall Street overnight after the U.S. 10-year treasury yield broke 3.2 percent to hit a high not seen since 2011.
Before Friday's losses, the Taiex had shed 287.43 points, or 2.61 percent in the past week, with foreign institutional investors selling a net NT$22.45 billion-worth of shares on the main board over the past four trading sessions amid worries over a rate hike cycle by the U.S. Federal Reserve.
Due to the recent steep downturn, there have been fears that the local equity market could face risks.
Deputy Finance Minister Juan Ching-hwa (???), the executive secretary of the stabilization fund, told the press that although the local main board had taken a beating in recent sessions, the losses were largely caused by volatility in the global financial markets.
"Many listed companies on the main board and the over-the-counter (OTC) market enjoyed an increase in earnings," Juan said. "Moreover, Taiwan, as a whole, has an improving economy. So after today's plunge, I expect the local equity market will return to better fundamentals."
In the first half of this year, listed companies on the main board and the OTC market posted NT$1.1 trillion (US$35.71 billion) in net profit, a record high, up 21.4 percent from a year earlier.
According to Juan, Taiwan is expected to report another year-on-year increase in exports for September on the back of strong global demand next week.
"Blessed by sound economic fundamentals, investors should have faith in the future movement of the local equity market," Juan said. "The stabilization fund has no immediate plan to jump into the market to support share prices.
The NT$500 billion stabilization fund was set up in 2000 by the government to serve as a buffer against unexpected external factors disrupting the local bourse.
The fund intervenes in the market when it receives authorization from the fund committee, which is currently managed by Juan.
Source: Focus Taiwan News Channel