Financial Supervisory Commission Chairman Wellington Koo (顧立雄) yesterday downplayed recent corrections on Wall Street and advised investors to base their decisions on fundamentals as trading resumes on the local bourse today following the Lunar New Year break.
Local investors locked in their profits or trimmed holdings ahead of the holiday as market sentiment remains anxious over the pace of the US Federal Reserve’s interest rate hike cycle.
The markets were reacting to expectations of rising inflation and interest rates, and the US’ economic growth momentum remains intact as reflected by favorable manufacturing and employment statistics, Koo said.
During the holiday the commission has been monitoring developments on the global markets, he said, adding that Taiwan’s economy is supported by solid fundamentals, such as corporate profits and exports.
In the first nine months of last year, pretax profits of companies listed on the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEX) rose 15.05 percent and 18.15 percent on a yearly basis respectively, while combined revenue during the period rose 6.75 percent to NT$3.2 trillion (US$109.05 billion), Koo said.
At the end of last month, foreign institutional investors had net inflows and the local banking, insurance and asset management sectors reported ample liquidity, Koo added.
However, Koo reminded investors to be aware of industry trends and have sound risk management.
To expand the nation’s capital markets, the commission would continue to work toward improving corporate governance, devising alternative listing requirements and expanding product offerings, he said.
The commission is working with the TWSE and the TPEX to devise alternative assessment metrics based on market value, capitalization, revenue streams and cash flows from operating activities that would allow start-ups to be listed without meeting profitability requirements, Koo said.
Koo also said that the commission is drafting an overhaul of corporate governance requirements to be completed by 2020 that aims to redefine the metrics of measurement for companies’ commitment to auditing and supervision.
The commission is also exploring exchange traded notes, an instrument that combines aspects of bonds with exchange traded funds and are issued as structured debt by issuing banks, he said.
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