The nation’s net foreign fund outflow totaled US$3.89 billion last month, the first outflow over the past six months, as foreign institutional investors continued to sell local shares amid the COVID-19 outbreak, Financial Supervisory Commission (FSC) data showed.
Foreign institutional investors sold a net NT$129.24 billion (US$4.3 billion) of shares in the local equity market last month, higher than the NT$36.46 billion sold in January, the data showed.
Foreign investors dumped a net NT$129.8 billion of local shares of companies listed on the Taiwan Stock Exchange, while they purchased a net NT$627 million on the Taipei Exchange, lower than the NT$6.53 billion bought a month earlier, the data showed.
“That reflected weak confidence among foreign institutional investors amid the ongoing outbreak. They were concerned with local companies’ profitability, with the outbreak disrupting supply chains and delaying companies’ resumption of operations,” a commission official surnamed Wu (吳) told the Taipei Times.
The benchmark TAIEX recovered its previous loss in the middle of February, but steadily went down with the escalating outbreak, the TWSE data showed.
Equity markets in neighboring countries also witnessed a retreat.
Due to the sell-off, the value of foreign institutional investors’ equity assets accounted for 40.69 percent of total last month, down from 41.23 percent a month earlier, Wu said.
However, the commission was not concerned about last month’s net outflow, as the amount was not particularly big, Wu said.
“The movement of foreign funds is volatile in Taiwan, with net inflow and outflow. We already saw net inflow of foreign funds earlier this week,” Wu said.
Last month’s difference between the amount of fund outflow and the amount of foreign institutional investors’ selling could be because some investors did not immediately move their funds out of Taiwan, Wu said.
Those investors might plan to buy local stocks again in the near term or simply wait for the exchange rate of the New Taiwan dollar against the US dollar to strengthen, which would help investors earn more money when converting the local currency to the greenback, Wu said.
Chinese institutional investors reported a net fund outflow of US$3.7 million after selling a net NT$316 million in local shares last month, the commission’s data showed.
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