The decision to ban the purchase of “little-traded stocks” by the Labor Pension Fund was taken to avoid future liquidity risks, the Bureau of Labor Insurance said yesterday.
The ban has been in place since last year, bureau president Luo Wu-hu (羅五湖) said, adding that the move was made following a scandal last year involving irregular practices by fund managers involved in four state funds. The labor fund was also barred from trading small-cap stocks after the scandal.
Small-cap stocks are those with a market capitalization of less than NT$1 billion (US$34.29 million), while little-traded stocks are defined as those whose average five-day trading volume over the past 20 trading sessions is less than than 500,000 shares.
“Such stocks are not easily unloaded once purchased, which creates risk. Even if we win on the account books, we still risk being unable to sell them,” he said.
Luo made the remarks when he was invited to attend a legislative hearing on upgrading the performance of the fund’s management.
However, Chinese Nationalist Party (KMT) caucus whip Lai Shyh-bao (賴士葆) said banning this type of trading was “ridiculous.”
“The less intervention in the market, the better,” Lai said, adding that fund managers should be given free rein.
Minister of Civil Service Chang Che-shen (張哲琛) said that the Civil Servants Pension Fund would not ban the purchase of little-traded stocks, while Council of Labor Affairs Vice Minister Kuo Fong-yu (郭芳煜) said the council would review its policy on the matter.
Lai said that government pension funds often commission outside operators to get better returns on stock market investments, but this practice carries the risk of irregularities, as evidenced in last year’s stock manipulation by outside managers that caused heavy losses for the labor pension fund.
He said that if an insurance system could be adopted to minimize the risk of unethical fund managers, then high returns and risks could both be taken into consideration. Lai proposed that the relevant agencies conduct assessments within one month on requiring outside fund operators to take out “liability insurance.”
Lai said that if such a measure were taken, there would be no need to ban little-traded stocks.
Financial Supervisory Commission vice chairwoman Jennifer Wang (王儷玲) said she supported Lai’s proposal. She added that the commission is studying the matter, but that no insurance company currently offers such a product.
“If the four government funds decied that they have a need for this insurance, the commission will work with them toward that end,” Wang said.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by