Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) yesterday said that the commission will not rule out lifting a ban on the short-selling of stocks at less than the previous day’s closing prices, as the local stock market is regaining strength.
However, Tseng said that a few more days of observation is needed before scrapping the ban, depending on the TAIEX’s trading prices and turnout.
“The ideal turnover is about NT$12 billion [US$365.74 million] per day,” Tseng said.
Although the TAIEX outperformed neighboring markets in Japan and China yesterday, it is still being affected by uncertainties over the US Federal Reserve’s intention to hike interest rates, he said.
The regulator had imposed a ban on short-selling after the TAIEX fell below the 10-year moving average of 7,800 points on Aug. 21. The TAIEX yesterday rose 1.94 percent, or 155.74 points, to close at 8,174.92.
“Toward the end of [yesterday’s] session, we detected a sudden spike in share-buying totaling about NT$20.94 billion that sent the TAIEX soaring to a 108-point gain,” Tseng said.
Based on its scale, the buying spree was likely the work of foreign institutional investors, as the National Financial Stabilization Fund (國安基金) cannot be activated when the market is rising, he added.
Tseng was speaking at the sidelines of a forum on promoting consolidation in the nation’s banking sector.
During his address, Tseng said that consolidation through mergers and acquisitions remains the key for the nation’s banking sector to adapt to emerging trends such as the rise of Internet, big data, mobile and cloud technologies, as well as social networks that might usher in disruptive changes.
“The nation currently has 38 banks, 74 securities brokerages and 42 insurance carriers, which is simply excessive,” Tseng said.
He said that most of the smaller players simply do not have the scale to furnish the immense investments required, as financial services inevitably migrate toward digital channels and vie for markets in the greater Asia-Pacific region beyond the confines of Taiwan.
“The purpose of this event is to communicate this fact to smaller banks and I would urge them to consider merger and acquisition offers while their value is still high,” Tseng told reporters.
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