The government yesterday decided not to use the state-run National Stabilization Fund (國家金融安定基金) to support the local stock market, after the fund’s committee members held a routine meeting and discussed the intensifying tensions on the Korean Peninsula.
While the situation in East Asia has raised public concern over the nation’s financial markets, the fund’s committee said in a statement that it would not act, because it saw no signs of disorder and turbulence.
“The government will carefully watch further developments in the H7N9 avian flu situation, the threat of war on the Korean Peninsula, and the impact on Taiwan’s financial markets,” the committee said.
The benchmark TAIEX moved within a narrow range yesterday amid thin trading, closing 24.26 points higher at 7,752.80.
Even so, Minister of Economic Affairs Chang Chia-juch (張家祝) expressed concern about the impact of a potential war on the Korean Peninsula on Taiwan’s industries.
“I think any regional wars or turbulence will not be good for the economy,” Chang said on the sidelines of the opening ceremony of an auto parts trade show in Taipei.
While it will not be difficult to make some adjustments to Taiwan’s supply chains if war breaks out, the possible adjustments are basically near-term plans, which means that Taiwan’s economy could still be negatively affected in the long term, Chang said.
Taiwan Electrical and Electronic Manufacturers Association chairman Arthur Chiao (焦佑鈞) said on the sidelines of the event that Taiwan’s DRAM sector is unlikely to be jolted by the tension between the Koreas.
“Taiwan’s DRAM production capacity is in a fixed range and is unlikely to change in the near term. I don’t think the local industry will be greatly affected if war breaks out,” said Chiao, who also serves as chairman of memorychip maker Winbond Electronics Corp (華邦電子).
Local media reported yesterday that Taiwanese industries such as DRAM, flat panels, machine tools, petrochemicals and textiles would benefit from potential supply interruptions at South Korean firms.
However, Yuanta Investment Consulting Co (元大投顧) dismissed the reports, saying it was too optimistic to expect any possible transfer of orders.
“If a war breaks out, it will affect not only supply, but also demand,” Yuanta analysts Wang Deng-cheng (王登城) and Jennifer Yeh (葉覲瑋) said in a note yesterday.
Yuanta analysts said interruptions to the supply chain would be a concern for the nation’s electronics-related industries, while the petrochemical and textile industries would experience limited impact from a possible shortage of raw materials.
Additional reporting by Kevin Chen