The TAIEX yesterday rallied 6.37 percent to 9,234.09 points after the government on Thursday pledged to activate the National Stabilization Fund.
The benchmark index opened up 135.52 points and surpassed its 10-year moving average of 9,110 points after an hour of trading, Taiwan Stock Exchange (TWSE) data showed.
Turnover totaled NT$234.027 billion (US$7.72 billion), slightly down from NT$271.17 billion a day earlier, but higher than last month’s average of NT$146 billion, the data showed.
Photo: Liu Hsin-de, Taipei Times
Foreign institutional investors, who have been selling stocks in the local equity market since March 6, yesterday showed a net sale for the consecutive 11th day after offloading NT$21.9 billion, the data showed.
It seems that domestic investors were more encouraged by the government’s measures than foreign peers, Hua Nan Securities Investment Management Co (華南投顧) chairman David Chu (儲祥生) told the Taipei Times by telephone.
The measures included the central bank cutting rates by 25 basis points, the Financial Supervisory Commission’s ban on short-selling and the Ministry of Finance’s activation of the National Stabilization Fund, Chu said.
“All of them are expected to be helpful, as they send a message to investors that the government would do something to curb the decline of the TAIEX,” Chu said.
However, it remains unknown how long the market would keep improving due to the stimulus policies, as the global economic outlook is not rosy with the COVID-19 pandemic weighing on private consumption worldwide, Chu said.
Selling among foreign institutional investors is not likely to end soon, as they, being fund management companies, need to sell stocks to pay investors who want cash amid the uncertainty, Chu said.
In related news, the commission on Thursday said that it would encourage the nation’s life insurance companies to increase their investment in local shares.
The commission, which last year added an asymmetric adjustment mechanism into its risk-based capital calculation for life insurers, cut the risk weighting of local shares from 27.3 percent at the end of last year to 14.62 percent on Thursday, it said.
The move would allow insurers to hold less capital when they increase investment in local stocks and thus ease the pressure of maintaining good capital adequacy, it said.
Cathay Life Insurance Co (國泰人壽) said that it would not add investment in local stocks solely because of the reduction of risk weighting, as its ratio — 346 percent as of the end of last year — was much higher than the minimum of 250 percent.
However, it would continue selecting good targets and looking for good times to increase investment, Cathay said.
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