The government said yesterday it would continue to use the state-run National Stabilization Fund to support the local stock market for the next three months, a move that is aimed at propping up investor confidence as the nation holds presidential and legislative elections today and amid macroeconomic uncertainty in the near term.
“The fund’s management committee has authorized continued intervention to ensure the stability of Taiwan’s stock market amid ongoing uncertainty over debt in some foreign countries,” the Ministry of Finance said in a press release.
The committee would continue to entrust state-owned financial institutions to invest in the market on behalf of the fund and thereby stabilize the stock market for three months, the release said.
The committee activated the fund on Dec. 20, the first time the fund has intervened in the stock market since September 2008. Since then, the TAIEX has risen 7.79 percent, or 518.9 points, closing at 7,181.54 yesterday, the second-highest climb in major stock markets in that period, data from the Taiwan Stock Exchange showed.
However, the TAIEX remains 13.66 percent lower than it was at the end of July last year, a -performance that only the Shanghai Composite Index has done worse than.
The TAIEX yesterday ended 5.04 points, or 0.07 percent, lower at 7,181.54, on turnover of NT$97.84 billion (US$3.27 billion), as political uncertainty ahead of today’s elections prompted investors to pocket early gains on the local bourse.
The NT$500 billion National Stabilization Fund continued its intervention, buying into large-cap stocks, such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), smartphone maker HTC Corp (宏達電), Formosa Plastics Corp (台塑) and some financial firms, cushioning the impact of profit-taking, dealers said.
Low market turnover could be another reason the committee has authorized the intervention, they said. Based on stock exchange data, average daily turnover has fallen to as low as NT$71.3 billion in the local bourse since last month.
A reliable source told the Taipei Times yesterday that the fund had spent a total of NT$15.1 billion to stabilize the stock market as of the end of last year.
“Judging from the market movement, I think technical resistance ahead of the 7,200 point mark remains strong,” Horizon Securities (宏遠證券) analyst Benson Huang (黃重善) said.
“The election makes it even more difficult for the market to overcome technical hurdles at this time,” Huang added.
The silver lining was that some large-cap stocks remained resilient, thanks to the fund, although the broader market was overshadowed by non-economic factors, Huang said.
“The expanded turnover shows that some investors are willing to hunt bargains since the stabilization fund helped to restore market confidence to some extent,” he said.
“However, the market was still without a sense of direction,” he said. “Many are waiting for the political uncertainty to lift.”
Among the large-cap stocks, TSMC rose 0.65 percent to end the day at NT$77.50, HTC gained 3.78 percent to close at NT$481.00 and Formosa Plastics closed up 0.84 percent at NT$84.00.