The Financial Supervisory Commission (FSC) said yesterday it was ready with precautionary measures to stabilize the local stock market and help meet the funding needs of small and medium-sized enterprises in the event of potential knock-on effect from the escalating eurozone debt crisis in the wake of yesterday’s parliamentary elections in Greece.
The commission’s statement came after Premier Sean Chen (陳冲) said on Saturday that the government would take steps to cope with potential fallout from the Greek elections, the results of which will be known today.
Greece’s debt problems have unnerved investors across the globe with the local bourse shedding 11.16 percent over the past three months, along with the impact from the proposed capital gains tax on stock transactions.
The commission said it was keeping a close eye on the potential impact from Europe’s debt woes and would take measures, if necessary, to stabilize the stock market and strengthen securities transactions.
To that end, the financial regulator has asked financial institutions to enhance risk controls and capital adequacy levels.
Specifically, the commission asked financial institutions to raise their reserves for bad loans and to diversify profit distribution to shareholders.
The commission said it also coordinated with local banks and the small and medium enterprise credit guarantee fund to ensure the availability of funding for enterprises.
Chen asked the Ministry of Finance to work with state-run banks and government funds to prop up the local stock market if necessary, the Chinese-language Economic Daily News reported on Friday.
The National Stabilization Fund, managed by the ministry, could also be activated to boost local stock markets, the report said.
The premier asked the central bank to closely monitor the movement of the New Taiwan dollar against the US dollar, according to the report.
The central bank could cut key interest rates during its policy meeting on Thursday to stimulate the economy, the report said.
The Cabinet is scheduled to hold a meeting on Tuesday to discuss countermeasures to mitigate the impact of Greece’s possible exit from the eurozone following the elections.
The results of the Greek elections would have a major impact on the TAIEX this week, Prudential Financial Securities Investment Trust Enterprise Co (保德信投信) fund manager Bevan Yeh (葉獻文) said.
The TAIEX was likely to rise if Greece decided to stay in the single currency bloc after the elections, Yeh said.
Taishin Investment Trust Co (台新投信) also said the stock market would rebound higher if the pro-austerity camp won.
The fund manager recommended investors buy shares with better profit outlooks over the next quarter. He suggested buying stock in chip designers, LED companies, Apple Inc component suppliers and component suppliers to low-priced smartphone makers.
The TAIEX closed up 1.14 percent at 7155.83 points at close of trading on Friday.