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Gov't funds stabilize rocky TAIEX

TAIPEI, Taiwan -- The government's four major funds mobilized with large-scale buying yesterday in an effort to stabilize the stock market amid a near 200-point — or 2.34-percent — tumble, with the local bourse finishing at 8,264.48 points.

Government fund managers exuberantly stated that the market downturn represents the ideal opportunity to load up on holdings while prices are low, urging the investing public to refrain from panicking. The market was in a considerably less favorable condition when the TAIEX's 8,162-point benchmark was poised to be lost last year, said public fund managers.

According to reports, government funds yesterday concentrated buying on Taiwan's leading heavyweight blue chips including TSMC, Hon Hai, Delta Electronics (台達電), SPIL (矽品), MediaTek (聯發科), Fubon Financial (富邦金), Cathay Financial (國泰金) and Mega Financial (兆豐金), swooping in to load up on shares relinquished by foreign institutional investors. Market observers remarked that single buy orders for TSMC shares reached the scale of NT$500 million to NT$1 billion.

Government fund managers also revealed that about NT$3 billion to NT$5 billion was allocated for market stabilization measures yesterday, an amount in-line with figures recorded on the last day of trading prior to the Chinese New Year holiday. Managers stated that they began market stabilization measures immediately after seeing a rapid 170-point decline at the opening bell, with buying persisting until 11 a.m.

Foreign institutional investors oversold about NT$17 billion worth of shares prior to the Chinese New Year holiday, and they followed the feat by dumping about NT$10 billion to NT$20 billion worth of holdings yesterday, said government fund managers, stating that they expect market conditions to recover in the intermediate to long term, as the recovery of the U.S. economy takes hold.

With a foreign reserve of about US$416.8 billion, Taiwan is well equipped to bear the impacts of a global market downturn, said government fund managers, who also cited improving economic condition indicators recorded last December while allaying the concerns of the investing public. To kick off the Chinese New Year, Taiwan's three stock exchanges yesterday held press conferences and provided their respective outlooks for the course of this year as market trading resumes.

Downturn Short-term: Taiwan Stock Exchange Chief

Meanwhile, in response to the tremendous volatility observed in exchanges throughout the world during the Chinese New Year holiday, Taiwan Stock Exchange Corporation President Michael Lin (林火燈) allayed concerns by stating that the downturn is expected to be limited to the short term, and that investors should not be overly fixated on recent developments.

Gre-Tai Security Market (GTSM, 櫃買中心) Chairman Wu Sou-shan (吳壽山), however, warned of the correlative effects of the international markets' reaction to reduction of QE measures, adding that the Taiwan market may be hindered from rallying in the short term.

According to Wu, as the shares listed on the GTSM are issued by smaller-scaled enterprises, and are not heavily held by foreign institutional investors, the over-the-counter exchange may see relatively less pronounced declines in the wave of the downturn compared to Taiwan's other exchanges.

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