Taiwan's national stabilisation fund to stay in market to April 15

TAIPEI (The China Post/ANN) - The market reacted favourably to the announcement by market stabilisation fund committee to continue supporting Taiwan shares until April 15.

Just hours before the Taiwan Cabinet resigned en masse on Monday, its market stabilisation fund committee said it would continue supporting Taiwan shares until April 15.

The NT$500 billion (US$14.90 billion) National Financial Stabilisation Fund was authorised last August to support the bourse. It was due to exit shortly after the general elections on January 16, though the Ministry of Finance had declined to set a date.

On Monday morning, the Cabinet’s National Stabilisation Fund met for an hour and resolved to stay in the equities market until April 15.

Wu Tang-chieh, vice minister of finance and executive secretary of the National Stabilisation Fund committee, said the fund would continue to support shares due to volatile variables at home and overseas.

“These variables include a continued slide in international crude oil price, persistent problems related to the US Fed’s interest rate hike, as well as the far-reaching impact of China’s economy and foreign exchange on global financial and foreign exchange markets,” Wu said at a press conference at noon on Monday.

Domestic uncertainties have emerged following the January 16 general elections, as controversies persist over a caretaker Cabinet and the handover of power between political parties, according to the National Stabilisation Fund committee.

“Meanwhile, we are facing continued geopolitical risks (tensions in North Korea). We believe that the fund should continue its presence to increase investor confidence,” Wu said.

The fund committee said it reserves the right to exit before April 15 if uncertainties ease and the local bourse stabilises.

After the noon announcement, the weighted index on the Taiwan Stock Exchange reacted favourably, recovering from 7,627.89 to close up 49.17 points, or 0.63 per cent, at 7,811.18, on turnover of NT$80.97 billion.

A first for fund

The National Stabilisation Fund’s decision to renew its presence in the local bourse could mean that it will operate under a caretaker Cabinet for the first time on record.

The extension was announced just hours before Premier Mao Chi-kuo announced Monday at 2pm that he and his Cabinet were resigning en masse.

The Cabinet’s resignation, submitted despite apparent opposition from President Ma Ying-jeou, is seen as a move to prompt President-elect Tsai Ing-wen to form a caretaker Cabinet.

Performance report

Also on Monday, the Ministry of Finance released its latest report on the fund’s activity since its activation last year.

The National Stabilisation Fund was activated last August 24 to buffer against disruption from a sharply weakening Chinese yuan and other external factors.

As of January 15, the NT$500 billion fund has invested NT$19 billion in the local equity market and improved the bourse by 4.75 per cent to 7,762 points.

The fund injected about NT$12 billion of the NT$19 billion total investment after January 1 amid worsening volatility and moderated a market plunge, according to the ministry.

In the first 10 trading sessions of 2016, Taiex fell 6.91 per cent, less than nearly all other regional markets besides South Korea, Wu said.

(US$1 = NT$33.56)

Photos

No photos has been attached.