Still not time for stock mar­ket in­ter­ven­tion: of­fi­cials

The China Post - - BUSINESS - BY ENRU LIN

Heads of fi­nance said yesterday that the con­di­tions in Tai­wan’s stock mar­ket have still not met the terms for gov­ern­ment in­ter­ven­tion via the Na­tional Sta­bi­liza­tion Fund ( ).

For weeks, the un­der­per­form­ing lo­cal bourse has gen­er­ated spec­u­la­tion that the cen­tral gov­ern­ment will ac­ti­vate the Na­tional Sta­bi­liza­tion Fund, which is au­tho­rized to in­ject cap­i­tal to the bourse in the in­ter­ests of na­tional sta­bil­ity.

Shares plunged to a two-year low yesterday, clos­ing down 242.89 points, or 3.02 per­cent, at the day’s low of 7,786.92 on turnover of NT$101.64 bil­lion.

Fi­nan­cial Su­per­vi­sory Com­mis­sion (FSC, ) Chair­man Wil­liam Tseng ( ) said yesterday the cap­i­tal mar­ket still has not met con­di­tions for gov­ern­ment in­ter­ven­tion.

Tseng said the Na­tional Sta­bi­liza­tion Fund is only ac­ti­vated when fi­nan­cial mar­ket liq­uid­ity de­te­ri­o­rates, which is char­ac­ter­ized by neg­li­gi­ble trad­ing ac­tiv­ity.

“To­day to­tal trad­ing vol­ume of listed firms ex­ceeded NT$110 bil­lion, so to me it seems that the liq­uid­ity is still not at that point,” Tseng said.

Wu Tang-chieh ( ), vice fi­nance min­is­ter and ex­ec­u­tive sec­re­tary of the Na­tional Sta­bi­liza­tion Fund, also cited Fri­day’s vol­ume as ev­i­dence of con­tin­ued liq­uid­ity and said that mar­ket con­di­tions don’t yet fit the cri­te­ria for emer­gency in­ter­ven­tion.

The gov­ern­ment is au­tho­rized to use the fund af­ter ma­jor events and ma­jor in­ter­na­tional cap­i­tal move­ments that bat­ter in­vestor con­fi­dence, Wu said, cit­ing the Reg­u­la­tion on the Es­tab­lish­ment and Man­age­ment of the Na­tional Sta­bi­liza­tion Fund (

). But a key cri­te­rion for ac­ti­va­tion is that the cap­i­tal mar­ket has fallen into a state of dis­or­der, and that’s

not yet the case, he said.

TAIEX Tum­ble Not Re­sponse to

Stim­u­lus Plan

On Fri­day, the TAIEX fell to its low­est point since June 2013, mark­ing the be­gin­ning of its en­try into bear mar­ket.

The FSC chair­man said the fall was due partly to es­ca­lat­ing ten­sions in the Koreas and mainly to a U.S. stock rout that shook in­vestor con­fi­dence.

Tseng em­pha­sized to re­porters that it was not in re­sponse to the eco­nomic stim­u­lus plan that the Cab­i­net re­leased the day be­fore.

On Thurs­day, the Ex­ec­u­tive Yuan an­nounced five mea­sures for short-term eco­nomic stim­u­lus that mainly tar­get Tai­wan’s tourism and ser­vice in­dus­tries.

Ac­cord­ing to the Na­tional De­vel­op­ment Coun­cil, the mea­sures could gen­er­ate up to NT$8.85 bil­lion in tourism prof­its this year and pro­pel the growth of a slug­gish do­mes­tic econ­omy.

Fi­nance Min­is­ter Chang Sheng­ford ( ) said the fate of Tai­wan shares is linked to the health of mar­kets over­seas.

“Tai­wan stocks plunged to­day, but so did the stocks of the in­ter­na­tional econ­omy — shares of the United States, Ja­pan and China all fell by over 2 per­cent,” Chang said.

“From this you can see this is an in­ter­na­tional sit­u­a­tion and that the re­cov­ery of the global econ­omy has not been as sta­ble as pre­vi­ously thought.”

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