The government's National Stabilization Fund won't enter the stock market to buy stocks in the near term, a local Chinese-language newspaper reported yesterday, quoting unnamed sources. The paper added that the government will seek to improve the stock market's condition by focusing on improving industrial policies and buying stocks via financial institutions.
The report quoted sources close to the fund as saying that the steering committee of the fund has to meet before the fund can enter the stock market.
The government is now leaning toward letting the market seek its bottom and refrain from aggressively supporting the market given many equity markets around the world are currently in a downward trend, the paper said.
Meanwhile, the paper quoted managers of the government-related funds as saying that the funds have recently bought small amount of stocks. On the other hand, banks were said to have bought aggressively on Tuesday and a smaller amount yesterday.
The four government-related funds refer to the postal saving fund, the labor pension fund, the labor insurance fund and the civil service pension fund.
Recent reports also suggest that the stabilization fund cannot be mobilized as authorities are investigating whether fund managers are involved in insider trading.
The finance ministry's insider trading investigation -- according to two Chinese-language newspapers -- has named five brokerages that sold stocks on Nov. 16, the same day a government fund halted a series of interventions in the stock market stocks.
The ministry named units of Nomura Securities Co, Morgan Stanley Dean Witter & Co, UBS Warburg, Entrust Securities, and an unidentified fifth company, in a report on trading on Nov. 16, the day the key stock index plunged 4.9 percent, its biggest one-day fall in percentage terms in a month, the papers said, citing legislator Lo Ming-tsai.
While the reports didn't say that the firms committed any wrongdoing, Taiwan prosecutors are investigating a possible leak of the government's decision not to buy stocks that day, the papers said.
The stabilization fund has seen paper losses of more than NT$100 billion (US$3 billion) in its bid to arrest the market's steep decline, one Chinese-language newspaper said. A string of political clashes in have undermined investor confidence in Taiwan, where the key stock index has lost 39 percent of its value this year
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