The Financial Supervisory Commission (FSC) and the Taiwan Stock Exchange yesterday acted to sooth jittery investors, hoping to restore market confidence amid rocky trading this week.
However, the TAIEX still lost another 61.98 points, or 0.69 percent, to close at 8,914.13 points on the main bourse, despite a general rebound in neighboring markets in Japan, South Korea, Hong Kong and Shanghai.
“There is a lack of confidence in the Taiwan market,” Securities and Futures Bureau Deputy Director-general Chang Li-chen (張麗真) said.
Yesterday’s decline came a day after Wednesday’s steep 274.05-point tumble that sent the TAIEX below the 9,000-point mark for the first time this year.
However, the commission on Wednesday said that turnover expanding to NT$141.79 billion (US$45.4 billion) indicated that some investors were still seeking opportunities, unhindered by difficulties with liquidity.
As of Wednesday, the amount of margin calls totaled NT$54 million, while the average maintenance ratio among local investors stood at 156.57 percent, which was well above the 130 percent threshold requirement, the commission said.
In addition, Taiwan’s exposure to potential spill-over effects from recent dramatic declines in Chinese equities is limited, with NT$83.3 billion by Taiwanese brokerage and insurance companies and NT$113.1 billion by local securities investment trusts and consultation firms as of Wednesday, the commisson said.
Taiwanese banks’ Chinese stock exposure was NT$2.8 billion, it added.
“A survey of several fund companies this week revealed no irregularities in investors’ ability to redeem shares from exchange traded funds,” Chang said.
To help support the market, the commission said the government would encourage several listed companies to implement stock repurchase programs.
The suggestion, made during the trading session yesterday, appeared to be an unsual move, after the recent selloff in the local market has led investors to underestimate listed companies’ fundamentals.
According to the commission, between January and May this year, the nation’s listed companies listed on the main bourse and the over-the-counter market recorded combined revenue of NT$11.9 trillion, up 2.12 percent compared to last year. As of Wednesday, 68 companies had filed to repurchase their shares on the open market and the commission said it estimated that about NT$18 billion worth of treasury shares would be repurchased in the next two months.
As stock repurchasing needs to be approved by companies’ board of directors, the decisions by the 68 companies might have been reached by the outcome of Greece’s debt referendum early this week, a TWSE official said by telephone.
Still, the TWSE official said listed companies should hold more earnings conferences to better inform investors about the financial health of companies.
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