Equity dive costs each investor NT$200,000 in losses in August: statistics
A plunge on the local equity market in recent sessions posted massive losses for investors, market statistics showed . According to the data, equity investors in Taiwan have lost more than NT$200,000 on average so far this month.
The local equity market started a downtrend since late April and its downturn accelerated in August. So far this month, the weighted index of the Taiwan Stock Exchange fell more than 800 points or about 10 percent from a month earlier. That translated into a loss of more than NT$200,000 shouldered by each investor on average.
On Friday, the weighted index on the Taiwan Stock Exchange closed down 3.02 percent at the day’s low of 7,786.92 amid turmoil in the global equity markets stoked by concerns over weakening demand in the world. The losses sent the weighted index to a level below the 10-year moving average of 7,789 points, paving the path for further downturns, dealers said.
The local main board briefly breached 10,000 points in the April 28 session but started to trend lower due to concerns over the debt problems in the eurozone and fears over an interest rate hike cycle to be kicked off by the U.S. Federal Reserve later in the year.
Selling continued into the following months, with a precipitous decline in August, when investors were caught off guard by a move by the government to trim its forecast of Taiwan’s 2015 economic growth to 1.56 percent from 3.28 percent.
Weighted Index Lost 2,000
Points Since Last Month
Since late April, the weighted index has lost more than 2,000 points or about 22 percent. The sell-off cost each of the 9.43 million investors in the local equity market about NT$660,000 on average in less than four months.
In August, large-cap stocks, such as Taiwan Semiconductor Manufacturing Co. (TSMC, , and Fubon Financial Holding Co. (
suffered steep declines, to send the weighted index into a tailspin, which has eroded investors’ confidence and badly hurt market sentiment.
So far this month, TSMC, the most heavily weighted stock in the local market, has fallen 13.3 percent, while Fubon Financial has even shed 13.5 percent.
Amid concerns over further vol- atility in the global market caused by an economic slowdown, many retail investors have feared that the local equity market will fall further down the road and they will suffer more losses.
National Stabilization Fund
Due to these concerns, retail investors have urged the National Stabilization Fund to enter the market in a bid to prevent the index from further losses. The National Stabilization Fund is a mechanism set up by the government to serve as a buffer against non economic factors that may cause disruption of the local bourse.