Fewer retail investors entered the local stock market in the fourth quarter of last year, while more institutional investors, foreign and domestic, pushed ahead after technical consolidation in the market ended, data compiled by the Taiwan Stock Exchange (TWSE) showed on Monday.
During the October-to-December quarter, retail investors accounted for 55.96 percent of the local market’s turnover, down from 59.01 percent in the previous quarter, the exchange said in a statement.
In contrast, foreign institutional investors made up 32.74 percent of the exchange’s turnover, up 1.97 percentage points from the previous quarter, while domestic institutional investors represented the remaining 11.3 percent, up 1.08 percentage points, the TWSE said.
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Although market sentiment improved after November, and the TAIEX rose 1,577.07 points in the final quarter of last year, retail investors favored safer investment approaches, with dollar-cost averaging investments gaining NT$442 million (US$14.1 million) to NT$9.78 billion last month from the previous month, the exchange’s data showed.
Dollar-cost averaging is the practice of investing a fixed-dollar amount on a regular basis, regardless of the share price. It has become more popular among retail investors investing in high-dividend exchange-traded funds or local stocks with stable dividends, the exchange said.
Among retail investors, 2,973 “big players” participated in the local market in the fourth quarter, down 523 from a seven-quarter high of 3,496 in the previous quarter, TWSE data showed.
A “big player” is defined as an investor who trades at least NT$500 million in shares on the TWSE in a single quarter.
The number of “midsized players” — or retail investors with quarterly turnover of between NT$100 million and NT$500 million — decreased to 23,604 last quarter from 28,597 the previous quarter, while that of “small players,” with quarterly trading of less than NT$100 million, also fell to 4.34 million from 4.51 million, the data showed.
The exchange’s latest data are seen as an important indicator of investor confidence in Taiwanese equities, after the TAIEX’s robust performance last year, with a full-year gain of 3,793 points, or 26.7 percent.
The TAIEX yesterday closed down 199.95 points, or 1.14 percent, in line with other regional indices as concerns about geopolitical risks and Taiwan’s new political landscape after Saturday’s elections overshadowed hopes for an early US Federal Reserve interest rate cut, Capital Investment Management Corp (群益投顧) said in a note yesterday.
The index has dropped 2.14 percent so far this year.
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