The nation's stock regulator told local investors to refrain from selling stocks and requested details of their holdings as the government tries to shore up confidence in the world's third-worst performing market in the past six weeks.
For the second time in less than a year, local fund managers say the Securities and Futures Commission (
"Our government has told us we can't sell stocks too much -- so we buy one stock and sell another," said John Lin, who helps manage NT$12 billion (US$365 million) at Prudential Securities Investment Trust Co (保誠投信) in Taipei.
The SFC move follows the government's decision last week to make it easier for overseas funds to buy stocks. With the one-year anniversary of President Chen Shui-bian's (陳水扁) term in office on Sunday, government officials are concerned a prolonged equity slump will undermine confidence as the economy slows and unemployment hovers at a record high.
The TAIEX fell 17.66, or 0.3 percent, to 5,158.79 yesterday. The index has fallen 11 percent in US dollar terms since April even as the government stepped into the market.
On Friday, the government's pension and insurance funds bought a net NT$2 billion (US$61 million) of shares, local media reported.
As a result, the TAIEX reversed an early 1.7 percent decline to close up 2.2 percent as the government helped engineer a favorable response to the easing of restrictions on foreign investors. It cut the minimum size and duration that allows an operator of foreign funds to buy Taiwan shares.
The government isn't just looking for investors to curb their selling. Michael Ding, chief investment officer at International Investment Trust Co Ltd (
"The implication behind that was `don't sell,'" he said.
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