The Ministry of Finance (MOF, 財政部) will recommend to the Cabinet that it pool the resources of the four major government-related funds and coordinate buying to better support the market, as strong intervention by the funds only managed to nudge up the TAIEX by 3.96 points yesterday.
The recommendation comes amid reports that members of some of the funds believe that with each fund responsible for handling its stock trading on its own, the cumulative effect of buying by the funds has been diluted.
With the MOF -- which hinted of the changes in a 10-point stock market support proposal earlier this month -- coming to the same conclusion, it is recommending a mechanism to unify trading and better focus the funds' NT$200 billion in additional stock-buying firepower.
Though the government already has a unified stock market intervention system, the NT$500 billion National Financial Stabilization Fund, it requires a more formalized and public procedure to be activated compared with the four funds.
The government-related funds have reportedly been aggressive buyers of stock lately in an effort to stabilize the market after losses over the past month have pared over 1,000 points from the index.
Share prices closed marginally higher yesterday as losses in many stockes were offset by strong buying by government funds mainly in semiconductor stocks, dealers said. The Taiwan Stock Exchange weighted price index edged up 3.96 points to 8,158.63, following a 0.2 percent decline in the previous session.
The government-linked funds appeared to be focussed on buying microchip stocks to support the market from falling below the 8,000 psychological level, said Michael Hsu, manager with Fubon Securities.
An oversupply of shares was to blame for the fall, said Terry Liu, manager with KG Securities Advisory Company.
It's a matter of supply and demand, said Liu, pointing the issue of millions of new shares recently by bellwether semiconductor companies Taiwan Semiconductor Manufacturing Company and United Microelectronics Corp.
Yesterday's turnover was NT$60.86 billion against NT$60.28 billion in the previous session.
Declines led rises 353 to 154, with 88 stocks unchanged. The semiconductor sector and plastics sectors posted the largest gains.
Winbond Electronics, the most traded issue, moved up NT$1.50 to NT$87.50, Mosel Vitelic added NT$0.50 to NT$64.50 and Macronix International advanced NT$2.50 to NT$77.50.
Formosa Plastics gained NT$0.50 to NT$56.50 and Nan Ya Plastics rose NT$2.00 to NT$64.00.
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