Taiwan’s stocks fell for a fourth consecutive week last week to a fresh five-month low. While optimists had hoped the historic launch of direct cross-strait charter flights would help the market to rebound from recent lows, concerns about the economy and rising inflation continued to dampen market sentiment, sending the benchmark TAIEX lower by 320.35 points, or 4.24 percent, to close the week at 7,228.41.
To prop up the local bourse, the government has recently announced a spate of market-friendly measures and trotted out upbeat expectations over improved cross-strait relations in the hope of revitalizing the local economy. But many of these practices are either lip service, nonsense or of questionable use and legality.
For instance, the government said it would encourage domestic insurance companies — with total assets of NT$8 trillion (US$263 billion) — to buy local stocks to shore up the market. But regulations stipulate that local insurers can only invest up to 35 percent of their assets — or NT$2.8 trillion at the most — in the equity market and, most importantly, insurers are to only do so based on their own professional evaluations, not at the behest of the government.
The government said it would also ask board members of listed companies to increase their holdings in their firms to meet regulations, or else market regulators would strengthen monitoring when board members own less than the required numbers of shares for three months in a row.
The government apparently hopes such board member purchases can help boost market momentum. This practice is likely to improve corporate governance at these companies, but is not sufficient to give markets a real boost. Firms that have board members who own less than the required numbers of shares are typically not the type of blue-chip firms, such as Acer Inc or Taiwan Semiconductor Manufacturing Co (台積電), that can create a significant impact on market momentum.
As part of its effort to move the market, the government urged listed companies to exercise share buyback plans in a bid to create value for shareholders and increase market confidence.
Some companies followed suit last week in a token gesture to express their support for the government’s announcement.
Even though share repurchasing makes sense when a company’s share prices are extremely undervalued, not many companies will apply this practice because it would invite questions from critical shareholders about whether the buybacks are the most efficient use of the company’s own capital. How about exploring other options such as reinvestment plans or big dividend pay-outs?
On Thursday, the government offered good news to local brokerages as it approved proposals to raise the amount of assets that local mutual funds can invest in Chinese stocks, as well as in Hong Kong-listed H-shares and red-chip shares. It also allowed cross-listings of exchange-traded funds between the Taiwan Stock Exchange and the Hong Kong Stock Exchange.
This is a long-term plan designed to expand local capital markets, but it won’t help market sentiment in the near future, as it came as stock markets in China and Hong Kong have declined 49 percent and 23 percent respectively so far this year.
Taiwan’s stock market is now down more than 2,000 points from this year’s high of 9,300 and the TAIEX has fallen 23.5 percent since President Ma Ying-jeou’s (馬英九) inauguration on May 20.
While the government said the recent local market plunge is part of a broad sell-off amid global inflationary worries over rising crude oil and raw materials prices, it is going to be a difficult second half of the year for investors unless the oil price stops climbing or the government can fashion a real boost to market confidence.
There is much evidence that the Chinese Communist Party (CCP) is sending soldiers from the People’s Liberation Army (PLA) to support Russia’s invasion of Ukraine — and is learning lessons for a future war against Taiwan. Until now, the CCP has claimed that they have not sent PLA personnel to support Russian aggression. On 18 April, Ukrainian President Volodymyr Zelinskiy announced that the CCP is supplying war supplies such as gunpowder, artillery, and weapons subcomponents to Russia. When Zelinskiy announced on 9 April that the Ukrainian Army had captured two Chinese nationals fighting with Russians on the front line with details
On a quiet lane in Taipei’s central Daan District (大安), an otherwise unremarkable high-rise is marked by a police guard and a tawdry A4 printout from the Ministry of Foreign Affairs indicating an “embassy area.” Keen observers would see the emblem of the Holy See, one of Taiwan’s 12 so-called “diplomatic allies.” Unlike Taipei’s other embassies and quasi-consulates, no national flag flies there, nor is there a plaque indicating what country’s embassy this is. Visitors hoping to sign a condolence book for the late Pope Francis would instead have to visit the Italian Trade Office, adjacent to Taipei 101. The death of
The Chinese Nationalist Party (KMT), joined by the Taiwan People’s Party (TPP), held a protest on Saturday on Ketagalan Boulevard in Taipei. They were essentially standing for the Chinese Communist Party (CCP), which is anxious about the mass recall campaign against KMT legislators. President William Lai (賴清德) said that if the opposition parties truly wanted to fight dictatorship, they should do so in Tiananmen Square — and at the very least, refrain from groveling to Chinese officials during their visits to China, alluding to meetings between KMT members and Chinese authorities. Now that China has been defined as a foreign hostile force,
On April 19, former president Chen Shui-bian (陳水扁) gave a public speech, his first in about 17 years. During the address at the Ketagalan Institute in Taipei, Chen’s words were vague and his tone was sour. He said that democracy should not be used as an echo chamber for a single politician, that people must be tolerant of other views, that the president should not act as a dictator and that the judiciary should not get involved in politics. He then went on to say that others with different opinions should not be criticized as “XX fellow travelers,” in reference to
RSS