The effects of Taiwan’s rapidly aging population will soon spread to the nation’s capital markets, Financial Supervisory Commission Vice Chairman Cheng Cheng-mount (鄭貞茂) said yesterday, as young people increasingly shun investments.
Participation by young investors is critical to generating the momentum needed for the TAIEX to secure its hold above the 10,000-point mark, Cheng said on the sidelines of a forum in Taipei, as interest among the younger generation continues to lag.
He attributed the lack of interest in investment tools to the 2008 global financial crisis, as opposed to the nation’s stagnating wage growth.
Investment sentiment and confidence have yet to recover since the crisis, Cheng said, adding that investors have become increasingly wary about further gains as the TAIEX ascends.
Young people used to place a high priority on building a portfolio when starting to develop their careers, said Cheng, who holds a degree in economics.
He advised people to invest in low-priced stocks and build their portfolio as their financial capacity grows.
The commission will continue to promote measures aimed at attracting young investors, such as allowing investors to purchase stocks in odd lots, which would improve access to stocks compared with buying 1,000-share lots that are prohibitively expensive, he said.
Young people tend to earn less, making it difficult to spare money for investment, he added.
Other measures are to include the implementation of a trade-by-trade mechanism that would improve pricing information transparency, allowing investors to take advantage of faster market order processing, Cheng said.
A big data study conducted by the Taiwan Stock Exchange last year found that retail investors contributed 51.98 percent of trading on the local main board, while foreign institutional investors represented 30.43 percent of turnover.
That compared with a peak in 2009, when retail investors represented 72.05 percent and foreign institutions contributed 16.32 percent of turnover, the study showed.
People aged between 41 and 60 contributed 58.1 percent of trading by retail investors, the study found.
Market observers have said that turnover on the local bourse will begin to fall due to the dwindling number of retail investors — who trade more frequently, but are retiring — and the percentage of trading by institutional investors — who favor long-term strategies — would continue to rise.
Retail investors were largely absent during the TAEIX’s rally last quarter, they said, citing the lack of margin utilization, a benchmark for retail investor activity.
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