The National Stabilization Fund yesterday urged calm after the TAIEX tumbled 1.38 percent, or 252.2 points, to 17,969.29, in line with global bourses after Russian President Vladimir Putin ordered troops into separatist-held regions in eastern Ukraine in what he called a “peacekeeping” mission.
The order came just hours after Putin signed decrees recognizing the independence of the Moscow-backed regions in a move that might escalate into outright military conflict with Ukraine as well as its backers, including the US and several European countries.
The TAIEX slumped below the psychologically critical 18,000-point mark after foreign institutional investors slashed holdings by NT$38.66 billion (US$1.39 billion), while mutual funds and proprietary traders cut positions by NT$3.78 billion and NT$2.75 billion respectively, Taiwan Stock Exchange data showed.
Photo: Sam Yeh, AFP
Officials from the fund urged investors to remain calm, saying that geopolitical tensions have limited bearing on Taiwan’s economic fundamentals, which remain sound, according to key barometers.
Export orders last month expanded 11.7 percent year-on-year to US$58.87 billion, the best on record for January, thanks to solid global demand for electronics used in smartphones, TVs, laptops, wearables, vehicles and other technology products, the Ministry of Economic Affairs said on Monday.
The NT$500 billion fund, set up by the government as a buffer against unexpected external factors disrupting the local stock market, said the rout came amid active transactions, suggesting that investors were keen to absorb the sell-off.
The daily turnover totaled NT$336.508 billion, noticeably higher than past few trading sessions, Taiwan Stock Exchange data showed.
“Investors should be worried in the event of panic sell-offs without buyers,” which would guarantee continued corrections, the fund said.
The TAIEX’s decline is consistent with corrections in South Korea, China and Singapore in terms of severity, and is milder than the one in Hong Kong, where a surge in infections of the Omicron variant of SARS-CoV-2 has caused further unease, it said.
Traders said the retreat in Taiwan could last for a short while until things clear up.
President Capital Management (統一投顧) said that the TAIEX might drop further today if Wall Street responds drastically to the Russian incursion, while Concord Securities Co (康和證券) said the index could test the next support at about 17,633 points, the intraday low on Jan. 26, if the main board continues to weaken on rising geopolitical tensions.
The bellwether electronics sector fell 1.24 percent yesterday, with the semiconductor subindex shedding 1.19 percent.
Old-economy industries, particularly steel and transportation sectors, also came under pressure as investors used rising geopolitical tensions as a pretext to pocket recent gains, Concord Securities said.
The Taiwan Stock Exchange sought to allay fears by saying that the collective revenue of local listed companies last year rose 15.19 percent to NT$38.16 trillion and the strong performance extended into the first month of this year, with total revenue spiking 35.33 percent to NT$3.34 trillion.
The nation’s GDP growth might exceed 4 percent this year on top of a 6.28 percent increase last year, the exchange said, adding that COVID-19 infections being brought under control could lead to a recovery across the board.
Additional reporting by CNA
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