Minister of Finance Su Jain-rong (蘇建榮) yesterday urged investors to have confidence in the local stock market, after it plunged 5.75 percent on Thursday amid worries over the 2019 novel coronavirus (2019-nCoV) outbreak in China, which has spread around the world.
Before the market opened yesterday, Su said that the viral infection remained in check in Taiwan, as he urged investors to have faith in the nation’s economic fundamentals and not be scared off by the market’s plunge on Thursday, the first trading session after the long Lunar New Year holiday.
The TAIEX on Thursday fell 696.97 points, its steepest fall in history, as concern grew over the spread of 2019-nCoV, with the WHO declaring a global health emergency.
Judging by the global markets’ performance, concern over the outbreak seems to have eased to a certain extent, Su said, referring to the US and European markets.
However, foreign institutional investors did not seem inclined to agree with Su, with the net sell of shares reaching NT$18.1 billion (US$598.35 million) on Thursday and another NT$17.2 billion yesterday, Taiwan Stock Exchange data showed.
The TAIEX closed 0.64 percent, or 73.36 points, higher yesterday.
Su said the Ministry of Finance advises the National Financial Stabilization Fund and has kept a close eye on global financial markets, which generally dictate the direction of the local market.
If it sees signs of irrational volatility in the local market, the ministry would suggest that the Executive Yuan convene a meeting of the stabilization fund’s committee to respond to market movements in an appropriate manner, he said, urging investors not to panic.
The NT$500 billion fund was set up in 2000 by the government to serve as a buffer against unexpected external factors disrupting the local bourse.
The fund intervenes in the market when it receives authorization from the fund committee, which is headed by Vice Minister of Finance Juan Ching-hwa (阮清華), the executive secretary of the fund.
Taiwan has sound economic fundamentals, Su said, citing the Directorate-General of Budget, Accounting and Statistics’ forecast that the economy would grow 2.72 percent this year.
The outbreak could encourage more Taiwanese businesses operating in China to expand their production in Taiwan, which would provide an additional boost to domestic demand along with ongoing public infrastructure projects, he said.
The stabilization fund would also be watching closely how Chinese stock markets perform when they resume trading on Monday, Su said.
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