The Financial Supervisory Commission (FSC) yesterday urged investors to “remain rational” when markets open today after the Lunar New Year holiday, as the nation’s economic fundamentals are “good.”
The commission’s remark suggests that the government is trying to assure investors after the world’s major stock markets moved downward over the past week due to a spate of negative developments, including falling crude oil prices, the US’ slower economic growth, growing yuan volatility and tensions between North and South Korea.
“The commission continued to closely monitor international financial developments during the holiday period,” it said in the statement.
The TAIEX closed down by 0.84 percent at 8,063.00 points on Feb. 3, the last trading session before the nine-day Lunar New Year holiday.
During the Year of the Sheep, the benchmark index fell by 1,466 points, or 15 percent, from the Year of the Horse, according to stock exchange data.
With global market sentiment sliding into bear market territory recently, speculation is high that the Taiwanese bourse might exhibit a slight catch-up decline when it reopens.
To prepare for the possible case of the jitters, the commission said it held an emergency meeting yesterday with officials from the Taiwan Stock Exchange and several government agencies to discuss major global economic and financial issues, as well as capital market situations.
Calling on investors to have confidence in the TAIEX, the commission said major US and European stock markets showed signs of stability on Friday after slumping earlier last week, with the Dow Jones Industrial Average closing up by 2 percent and shares in London and Frankfurt gaining 2.45 percent and 3.08 percent respectively.
The commission also addressed the healthy fundamentals of Taiwan’s listed companies, saying that these firms saw their combined sales on a consolidated basis for December last year rise by 0.2 percent from November to NT$2.67 trillion (US$79.65 billion), while their total combined sales for the whole of last year dropped just 0.66 percent, to NT$29.997 trillion, compared with 2014.
Listed companies on the Taiwan Stock Exchange and the over-the-counter Taipei Exchange hold average yield rates of 4.71 percent and 3.88 percent respectively, which are higher than those of major international stock markets, the commission said.
Taiwan’s stock market price-earnings ratio, a gauge used to evaluate the market’s equity investment, is trading lower at 12.93, which in a sense suggests local shares are cheap and worth investing in, the commission said in its statement.
The commission also shrugged off concerns about the impact of the Feb. 6 earthquake on listed firms in the Southern Taiwan Science Park (南部科學園區) and neighboring industrial zones, saying there was no major damage to factories from the magnitude 6.4 earthquake.
While the commission said Taiwan’s economy is expected to fare better than last year, investors will be monitoring the latest export figure for last month, which is due out tomorrow, and updated GDP data scheduled for release on Wednesday for any sign of an economic recovery.
Taiwan’s exports contracted for the 11th straight month in December last year, falling 13.9 percent annually and ending the whole of last year with a drop of 10.6 percent.
The Directorate-General of Budget, Accounting and Statistics in November last year forecast that Taiwan’s economy could grow 2.32 percent this year, after growing 0.85 percent last year.
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