Taipei, The Ministry of Finance (MOF) has not ruled out the possibility that the National Stabilization Fund will enter the local equity market to prop up share prices at a time of volatility in global financial markets.
In a statement released Sunday, the MOF said the stabilization fund committee might hold a meeting to decide on whether the fund will intervene if the local market continues to suffer sell-offs in reflection of further foreign fund outflows in the wake of a stronger U.S. dollar.
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 Deputy Finance Minister Juan Ching-hwa (???), the executive secretary of the stabilization fund.
The MOF statement represented a change in course from Juan's comments made before the local equity market closed Friday. He said the fund has 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.
Juan said the local economic fundamentals remained sound, with listed companies in the stock market enjoying improving profitability.
Last week, the Taiex, the benchmark weighted index on the Taiwan stock Exchange (TWSE), fell 489.22 points, or 4.44 percent, to close at 10,517.12 Friday, the index shed 1.88 percent amid rising fears that the U.S. Federal Reserve will speed up its pace of carrying out a rate hike cycle.
Taiwan posted the steepest decline among the markets in the Asian region last week. On Monday, the Taiex continued a downtrend, down 0.58 percent to close at 10,455.93.
The MOF said that Taiwan has a healthy economy, citing a strong export performance on the back of solid global demand.
In the first eight months of this year, Taiwan's outbound sales rose 8.9 percent from a year earlier. The country is expected to report an increase in exports for September, when many international tech brands, in particular Apple Inc., unveiled new devices.
The MOF said the local equity market is expected to react to the good economic fundamentals, with many listed companies on the main board and the over-the-counter market reporting an 8.72 percent increase and a 10.31 percent rise in combined sales, respectively, in the first eight months of the year.
The ministry said the local equity market remained attractive due to a relatively high dividend yield of more than 3.99 percent on average.
Source: Focus Taiwan News Channel