Tue, Oct 09, 2018 - Page 12 News List

FSC might prop up stock market: Koo

‘FLATTENED OUT’:The commission did not support the TAIEX yesterday, despite the stock market falling below 10,500 points, as the daily loss was considered small

By Kao Shih-ching  /  Staff reporter, with CNA

Financial Supervisory Commission Chairman Wellington Koo answers questions at a meeting of the Finance Committee at the Legislative Yuan in Taipei yesterday.

Photo: Chien Jung-fong, Taipei Times

As Taiwanese shares fell for the fifth consecutive session yesterday to close at their lowest level in eight months, Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) said the commission might take action to prop up the local market.

The TAIEX ended down 61.19 points, or 0.58 percent, at 10,455.93, the lowest level since Feb. 12, when the index hit 10,421.09 points, Taiwan Stock Exchange (TWSE) data showed.

Earlier yesterday, Koo told the Legislative Yuan’s Finance Committee that if the TAIEX fell below 10,500 points, the commission might take some measures to keep the stock market stable, such as encouraging private firms to buy back shares and hold investors’ conferences to assure shareholders.

The 10,500-point mark is considered psychologically important for investors, as the market tends to become volatile and bumpy whenever it falls below this level, Koo added.

However, the commission did not act yesterday, with Koo later telling reporters that he thought the 0.58 percent decline was relatively small.

The commission remained on standby “because the decline of 61.19 points today is smaller than last week’s fall” of 489.22 points, Koo said, adding that local shares had “flattened out” rather than plunging.

Lawmakers on the committee asked Koo whether the state-owned National Stabilization Fund would intervene in the stock market to support local shares.

Koo said that he was not in a position to comment on the matter.

However, he said that he remained confident in the local market as locally listed companies have sound fundamentals.

The Ministry of Finance in a statement on Sunday said that the government did not rule out the possibility of using the NT$500 billion (US$16.17 billion) fund to prop up share prices in case of volatility in global financial markets.

The stabilization fund committee might meet at any time to decide whether the fund would intervene if the local market continues to see sell-offs due to foreign fund outflows, the ministry said.

Koo said the fund had not yet intervened because the stock market is “not in disorder” and he had not seen investors make irrational decisions.

As the TAIEX moved closer to its nearest technical support at about 10,400 points, bargain hunters emerged and helped the broader market recover from the day’s low, dealers said.

“It appears that some investors are willing to hunt for bargains among non-tech stocks for the moment to prevent the TAIEX from falling further and to offset TSMC’s plunge,” Xincheng International Investment Consultant (信誠環球投顧) analyst Chang Chih-cheng (張志誠) said.

“Judging from the gains posted by large-cap old economy and financial stocks, I am guessing that the buying came mainly from government-led funds, which wanted to prop up the index at a time when regional financial markets remain jittery over fund outflows,” Chang said.

Chang said the concerns were triggered by the sharp rise in the yield of benchmark US 10-year Treasuries on expectations that the US Federal Reserve could accelerate interest rate hikes.

That has pushed the value of the US dollar higher and led investors to pursue US dollar-denominated assets.

Foreign institutional investors sold a net NT$11.13 billion in shares in Taipei yesterday, TWSE data showed.

This story has been viewed 1447 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top