Volume up 14% since new trading range: FSC
Trading volume on the benchmark TAIEX rose by 14 percent in the first five sessions of its new fluctuation range, the Financial Supervisory Commission (FSC,
) said yesterday. Last Monday, market regulatory authorities widened the trading band from 7 percent to 10 percent.
The TAIEX took a battering in the first five trading days of the new measure, ending down 360.94 points, or 3.72 percent, to close at 9,340.13 on Friday.
Asked for his reaction to the market dive, FSC Chairman William Tseng (
) said yesterday that the swing is due mainly to Greece’s unresolved debt crisis and other sources of financial volatility overseas.
Tseng said 10-percent trading range has amplified volume by about 14 percent, and “when there is an effect on volume, there is an effect on price.” Average daily trading volume swelled from NT$ 121.5 billion in May to NT$138 billion in the first five trading days of June, Tseng said at the Legislative Yuan.
Market Dive Due to Global Volatility:
Tseng stressed yesterday that last week’s market underperformance was unrelated to the widened trading range.
During a meeting of the Legislative Yuan’s Finance Committee ( ), he attributed the dive to overselling by foreign institutional investors, caused by variables including Greece’s decision to delay a debt payment to the International Monetary Fund (IMF).
Within six trading days, foreign investors have sold off NT$37.4 billion worth of shares, affecting TAIEX while sparing the GRETAI Securities Market (GTSM,
), which is dominated by domestic investors, he said.
The GTSM saw only a mild 5.6-point fall, which indicates that the TAIEX showing was likely shaped by foreign investors and not domestic ones reacting to new regulatory measures, he said. The FSC chairman said that despite the selling spree, foreign players have retained NT$204.3 billion of funds in the local bourse and may increase investment when global variables stabilize.
He said yesterday there is a “high likelihood” that mainland Chinese stocks are about to secure inclusion in the global markets index MSCI, and that Taiwan must make bolder market reforms to maintain competitiveness.
30% Flux Cap
The FSC’s goal is to gradually expand the stock price fluctuation cap to 30 percent, he said.
During interpellation with Kuomintang (KMT) Legislator Lai Shyh-bao ( ), Tseng said that the former 7-percent cap had created the equivalent of a “kiddie pool,” while lifting it to 10 percent had upgraded the market to a “youth pond.”