Domestic financial institutions have been continuously increasing their purchases of government bonds to avoid high-risk stock market investments, data from the latest bond auction showed.
The central government sold NT$30 billion (US$1 billion) in 30-year bonds at a yield of 1.738 percent at auction yesterday, with the sale attracting bids for 1.4 times the amount of bonds on offer, the central bank said in a statement yesterday.
The 1.738 percent yield marked the lowest level in history for the 30-year bonds, reflecting intense bidding driven by excessive market liquidity, the bank’s data showed.
The results indicated that global economic uncertainties and the domestic economic slowdown induced more investors to add to their bond holdings to hedge against uncertainties in the stock market.
The bond market in Taiwan has been attracting increased investments from domestic financial institutions for the past few months.
On June 26, the central bank sold NT$40 billion in 10-year bonds at a yield of 1.21 percent, the lowest level in history for 10-year bonds, while the yield on five-year bonds issued by the bank dropped to its second-lowest level ever at 0.877 percent on July 20.
Earlier this month, the yield on 20-year bonds issued by the central bank also slid to a historic low of 1.597 percent.