Wed, Oct 10, 2018 - Page 12 News List

Government funds help lift index

By Kao Shih-ching  /  Staff reporter

The TAIEX staged a rebound yesterday, with government funds likely helping to prop up local shares, reversing a five-day losing streak, analysts said.

The index opened lower yesterday, dropping to 10,428.97 points in the first 10 minutes, but gradually recovering at about noon and ending 10.9 points, or 0.1 percent, higher at 10,466.83 points on turnover of NT$120.63 billion (US$3.9 billion), Taiwan Stock Exchange (TWSE) data showed.

The rebound was led by Taiwan Semiconductor Manufacturing Co (台積電), the most heavily weighted stock on the local market, which closed up 0.2 percent.

The recovery indicated that the local stock market has stabilized, although the gain was only mild, Capital Investment Trust Corp (群益投信) fund manager Daniel Tsai (蔡彥正) said.

The textile, plastic, paper, financial and steel sub-indices rose, while the food, electronics, chemicals, biotech, semiconductors and rubber sub-indices dropped, TWSE data showed.

The Financial Supervisory Commission said it did not intervene in the market by activating the state-run National Stabilization Fund, even though the TAIEX was below 10,500 points, a level commission Chairman Wellington Koo (顧立雄) considers a proper entry point for the government fund.

It is highly likely that two other government-run funds — the labor insurance fund and the pension fund — helped prop up the market, as the stocks that rose were the ones favored by state-run funds, Xincheng International Investment Consultant (信誠環球投顧) analyst Chang Chih-cheng (張志誠) said.

The Bureau of Labor Funds declined to comment on media reports that about NT$42 billion of government-run funds were used to support the stock market.

Although the index rebounded, foreign institutional investors sold a net NT$5.72 billion of local shares, marking the fourth consecutive session of net selling since Thursday, Chang said.

The nation’s eight state-run banks bought a net NT$1.38 billion of local shares, bringing the total amount of net buying to NT$14.57 billion since Tuesday last week, Chang said.

That can also be considered one form of government effort to support the local stock market ahead of Double Ten National Day, he said.

Investors should closely monitor the Hong Kong and China stock markets, given their close links to the local stock market, he added.

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