For­eign cap­i­tal inflow hits US$201.62 bil. record high

The China Post - - TAIWAN BUSINESS - BY JOHN LIU

Net for­eign cap­i­tal inflow amounted to a record high US$201.62 bil­lion as of April 27, said Fi­nan­cial Su­per­vi­sory Com­mis­sion (FSC) Chair­man Tseng Ming-chung ( ) yes­ter­day.

Tseng made the re­mark as he at­tended the 2015 Golden Ser­vice Awards cer­e­mony held by Com­mon­Wealth Mag­a­zine ( ).

Pressed by the me­dia on the side­lines of the event, Tseng com­mented on the re­cently launched “as­cen­sion plan” ( ), a pack­age of mea­sures aimed at boost­ing the stock mar­ket.

Among them is re­lax­ing the daily stock fluc­tu­a­tion limit from the cur­rent 7 per­cent to 10 per­cent, which is set to kick off in June.

An­other rule will also be im­ple­mented in May as a pre­lude to June’s man­date. The main­te­nance mar­gin re­quire­ment, which is the min­i­mum amount to be col­lat­er­al­ized in or­der to keep an open po­si­tion, will be raised from 120 per­cent to 130 per­cent.

Since the av­er­age main­te­nance mar­gin on the mar­ket is pegged at 160 per­cent, only a low pro­por­tion of in­vestors will need to in­crease their mar­gin, Tseng noted.

As­cen­sion Plan is for

the Long-term

The as­cen­sion plan is a “neu­tral” mea­sure that will en­able quicker re­flec­tion of in­for­ma­tion and fun­da­men­tals, and there­fore lead to higher liq­uid­ity, Tseng said.

The new sys­tem will bet­ter align with the global mar­ket, make trans­ac­tions more ef­fi­cient and con­se­quently at­tract more in­vest­ment ac­tiv­i­ties, Tseng added.

Nev­er­the­less, the new mea­sures are not ex­pected to wield im­me­di­ate im­pact on trade turnover, since they are set up for mid- and long-term im­prove­ments, Tseng said.

“When weigh­ing tax­a­tion and trad­ing mech­a­nisms, we take two as­pects into con­sid­er­a­tion. The first is for­eign and do­mes­tic in­vestors; the sec­ond is short- and long-term im­pact. Tak­ing them into ac­count will cre­ate a greater devel­op­ment room for the cap­i­tal mar­ket.”

For in­stance, low­er­ing se­cu­ri­ties and fu­tures trans­ac­tions taxes may not lift the lo­cal stock mar­ket im­me­di­ately. The fu­tures trans­ac­tions tax is not levied over­seas, and with its broad im­pli­ca­tions it de­serves fur­ther study, Tseng added.

In­sti­tu­tional In­vestors’ Con­fi­dence in the Mar­ket

Tai­wan Stock Ex­change Pres­i­dent Michael Lin ( ) ex­pressed ear­lier that chang­ing the cap limit on daily stock fluc­tu­a­tion will in­crease trad­ing over time once in­vestors get used to the new sys­tem.

The three largest in­sti­tu­tional in­vestors in Tai­wan — for­eign in­vest­ment in­sti­tu­tions, in­vest­ment trusts and deal­ers — placed more pur­chase than sell or­ders again yes­ter­day, by NT$ 5.9 bil­lion.

For­eign in­vestors have shown stronger faith in Tai­wan’s stock mar­ket, which re­cently hit the 10,000-point mark for the first time in 15 years.

For­eign in­vestors in gen­eral are up­beat about the lo­cal stock mar­ket’s prospects, cit­ing an abun­dance of money flow­ing around, higher cor­po­rate prof­itabil­ity, among other fac­tors.

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