Print

Mail

wiki links

Central bank disputes Citigroup report

The central bank yesterday said recent declines in local equities were not caused by a weakened New Taiwan dollar, challenging a Citigroup report released a day earlier.

Peter Kurz, head of Taiwan equity research at Citigroup Global Markets, wrote in the firm’s report that the recent fall of the NT dollar would help “boost tech sector performance, while depressing overall index performance.”

Kurz said the stock market’s underperformance could continue “as long as the currency remains weak.”

“This report runs contrary to the truth,” the central bank said in a statement yesterday, without naming Citigroup or Kurz.

The central bank said if a foreign investor wanted to invest in the stock market, that person would have to remit the funds to Taiwan and convert them to NT dollars before buying stocks. Conversely, foreign investors must first sell their shares before using the NT dollar proceeds to purchase foreign currency on the foreign exchange market for outward remittance.

This means that the NT dollar drops when the stock market is weak and investors exit, the central bank said.

“As shown by the above analysis, the head of research in question may have inadvertently misread the direction of causality,” the statement read.
This story has been viewed 940 times.