Local investors should not become self-satisfied about the performance of the local equity market, but should consider what it would be like if Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was not on the bourse, Financial Supervisory Commission (FSC) Chairman Thomas Huang (黃天牧) told a forum on Taiwan’s capital market in Taipei yesterday.
Huang’s comment came after the world’s largest contract chipmaker saw its shares soar to a new intraday high of NT$466.50 on Tuesday, lifting the TAIEX to an intraday record of 13,031.7 points and prompting analysts to attribute recent rallies to “TSMC’s one-stock show.”
Yesterday, the TAIEX dropped 0.46 percent to 12,664.80 points.
Photo: Fang Pin-chao, Taipei Times
As the heavily weighted TSMC could easily influence the local bourse, investors should refrain from gloating over the rallies, Huang added.
The forum was organized by the Chinese-language Liberty Times (sister paper of the Taipei Times).
“We should think how the TAIEX would perform if there were no TSMC,” Huang said.
Instead of feeling good about the market thanks to the success of one big company, the regulator should focus more on the balanced development of all listed corporations, he said.
There are still many medium companies that have a solid business but low share turnover, because they remain unknown or are unpopular among investors, he said, adding that the commission would add a “market-making mechanism” next year to help them gain investors’ attention.
“Every good firm deserves the spotlight, regardless of their size,” Huang said.
The TWSE and Taipei Exchange (TPEX) announced earlier this week that they would relax the criteria for firms seeking to hold an initial public offering (IPO) this year, to mitigate the effects of the COVID-19 pandemic, he said.
Huang reiterated his plan of establishing a new TPEX board by the end of this year to enable some start-ups that have great potential but have not turned a profit to raise public funding.
“Overall, the next decade will be an important period for Taiwan to redefine and advance the nation’s financial status in Asia, as the redistribution of the global supply chain in the wake of the US-China trade tensions and the pandemic has opened a window of opportunity,” Huang said.
“The advantage of the nation’s capital market is not just its high yield, good corporate governance and transparency, but that investors can trust it, as Taiwan is a democratic country,” Huang said.
Taiwan Securities Association (券商公會) chairman Ted Ho (賀鳴珩) urged the regulator to clarify its market-making mechanism, as many securities firms have questions, such as whether the program would target institutional investors or retail investors, which would deliver different results, Ho said at the forum.
“Retail investors could easily heat up the market. For example, biotech stocks were so popular earlier this year — which I could not fully understand why — because they drew the attention of individual investors,” Ho said.
Chinese National Futures Association (期貨公會) chairman Falco Mi (糜以雍) said that the commission should be more tolerant of well-supervised financial firms when they make mistakes, as mistakes can lead to important innovations.
“I think that investor protection has been excessive, which only makes them less aware of the risks that they are taking,” Mi said.
There is a balance between insufficient and excessive investor protection, but the commission would improve investor education so that they can make good decisions, Huang said.
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