The net outflow of foreign funds from the local market last month hit a new one-year high amid fears over an early exit by the US Federal Reserve from its bond-buying efforts, the Financial Supervisory Commission (FSC) said.
Citing statistics released on Wednesday, the FSC, the nation’s top financial watchdog, said foreign investors recorded net fund outflows of US$2.96 billion last month due to uncertainty surrounding the global financial market outlook.
Concerns about the Fed’s next move ran deeper after US Federal Reserve Chairman Ben Bernanke said in mid-June that the bank is likely to scale down its stimulus package later this year and that it could end the program by the middle of next year if the economy achieves sustainable growth.
The Fed currently spends US$85 billion a month to buy government bonds and mortgage-backed securities, a move known as quantitative easing, which has lifted stock markets worldwide.
Last month, foreign institutional investors sold a net NT$117.50 billion (US$3.92 billion) of local shares as they rushed to cash in on liquid large-cap stocks to meet demand back home after the global financial markets were hit by rising concerns about the Fed’s move.
In the first six months of the year, foreign institutional investors were net sellers of NT$15.02 billion of shares on the main board, while being net buyers of NT$16.81 billion of shares on the local over-the-counter market, the FSC data showed.
Meanwhile, the FSC said no Chinese qualified domestic institutional investor filed an application with the commission to invest in the local stock market last month, despite the ban on Chinese investments being lifted at the end of May.