Mon, Nov 06, 2017 - Page 15 News List

Foreign investors return to buying

Staff writer, with CNA

Taiwan last month recorded a net fund inflow from foreign institutional investors, which became a key factor in boosting local equities and contributing to a higher New Taiwan dollar after presiding over a net fund outflow over the previous three months, the Financial Supervisory Commission (FSC) said.

The commission said foreign institutional investors were responsible for a net fund inflow of US$1.063 billion last month after being responsible for net outflow of US$2.307 billion in September, US$2.93 billion in August and US$940 million in July.

The outflow in the previous months came as foreign institutional investors pocketed large cash dividends from their equity investments in Taiwan before moving the funds out of the country, the commission said.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, was one of several listed companies that issued fat cash dividends in reflection of their sound bottom lines.

TSMC in July distributed NT$181.51 billion (US$6.01 billion) in cash dividends for last year’s earnings, most of which went to foreign institutional investors, who accounted for 80 percent of the company’s shares.

Due to the resumed inflow from foreign institutional investors, as well as rising participation by local retail investors, the TAIEX gained 409.86 points, or 3.95 percent last month.

During the same period, the index for the the over-the-counter (OTC) market, where small-cap stocks are traded, also grew 3.52 percent, while the New Taiwan dollar rose NT$0.1, or 0.33 percent, against the US dollar.

In the first 10 months of this year, aggregate net fund inflow from foreign institutional investors totaled about US$8.297 billion, topping the aggregate net fund inflow of US$5.555 billion seen for the entirety of last year, commission data showed.

Summary of hot money flows

‧ In October, foreign institutional investors were responsible for a US$1.063 billion net fund inflow into the country.

‧ In September, such investors presided over a net outflow of US$2.307 billion.

‧ In August, the flow of foreign institutional investors’ funds out of the country was US$2.93 billion.

‧ This was up from July, when US$940 million flowed out of the country.

‧ The outflow in the past months was attributed to investors selling stocks after local companies paid out large dividends.

‧ Despite the summer outflow, the year until this month has seen a net inflow of US$8.297 billion.

‧ This already tops last year’s total net investment inflow of US$5.555 billion.

Over the same period, foreign institutional investors bought a net NT$236.72 billion of shares on the local main board and NT$24.89 billion in equities on the OTC market.

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