Stabilization Fund could resume buying
Published: April 17, 2000
Source: The Taiwan Economic News
Just a week after Finance Minister Paul Chiu said the government-managed National Stabilization Fund would start disposing of the stocks it has bought, Vice Premier Liu Chao-shiuan hinted the fund may start buying stocks again.
The general stock price index peaked at 10,328 points nine trading sessions ago. However, the bourse tumbled by more than 1,200 points last week in the wake of the crash on the Wall Street. The drop has slashed the total market capitalization by some NT$1.8 trillion (US$59.4 billion).
On Saturday, the index slid 507.81 points to 8,866.8 in frenzied trading totaling NT$156.316 billion (US$5.16 billion).
Liu, who heads the committee supervising investment operations of the Stabilization Fund, said on Sunday that the government is closely watching developments on the U.S. stock market.
Liu refused to say if the fund will move into the market on Monday, saying only the fund will take action "whenever it is necessary."
According to rules governing operations of the fund, the government will move fund into the stock market when massive capital shifts affect Taiwanese investors' confidence.
But Vice Finance Minister Yen Ching-chang revealed that the other four public funds controlled by the government have already moved into the market to purchase shares since Friday to help stem the downslide.
He said the National Stabilization Fund established mid-March with a total budget of NT$500 billion, has not yet sold any share it had purchased. In view of the steep market downturn, it is impossible for the fund to unload its stockholdings, although the big drop will eat into the fund's face-value profits. The fund has injected NT$54.2 billion (US$1.8 billion) and held stocks of over 100 listed companies.
Chiu said on Sunday that investors in Taiwan should make rational investment judgement in spite of huge net-sell of stocks by foreign institutional investors and successive drops in share prices in New York.
He explained that Taiwan stocks are different from stocks in the U.S. since most listed firms in Taiwan are engaged in industrial manufacturing while share prices in the U.S. were lifted by Internet-related firms.
Chiu said Taiwan's overall economy remains sound and healthy and the recent stock price slide will be just a temporary phenomenon. |
