Taiwan’s FSC Downplays Foreigners’ Stock Sales, Eyes US Vote
(Bloomberg) -- Taiwan’s top financial regulator said recent sales of stocks by overseas investors are a “short-term phenomenon” that don’t represent a bearish view, with foreign holdings on an upward trend in recent years.
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Foreign investors account for about 42% of the island’s stock market, compared with 37.5% in 2022, Peng Jin-lung, head of the Financial Supervisory Commission, said in an wide-ranging interview on everything from risks with China to the US election.
“Our total market cap is increasing, and foreigners maintaining their holdings at this level means their investments are increasing,” Peng said. “Are foreign investors retreating from Taiwan? We can’t tell — we only know that trading frequency is increasing.”
Taiwan’s TWSE Index has dropped almost 9% from its record close on July 11, with some investors concerned after Republican presidential candidate Donald Trump cast doubt over his commitment to defending the island, which China claims is its territory. Peng said the regulator is sketching out various scenarios that may emerge from the US election, but declined to elaborate or comment on the parties or candidates.
“It’s not about who will win the US election, its about how their future policy could affect our industries,” Peng said in the interview in Taipei on Wednesday.
A victory for the Democratic Party’s likely candidate, Vice President Kamala Harris, may offer some policy continuity with the administration of President Joe Biden, who has been a strong supporter of Taiwan. But policy makers globally are trying to assess the impact of a second Trump presidency, not least because of his party’s shift toward trade protectionism.
“Taiwan took our chip business from us,” Trump told Bloomberg Businessweek, asking why the US is providing the island an “insurance policy.”
Indeed, Taiwan’s chip industry is a key reason that its benchmark index is still up roughly 24% this year, despite the recent decline. The island is home to critical suppliers of advanced computer chips used in everything from smartphones to artificial intelligence.
Taiwan Semiconductor Manufacturing Co. accounts for 34% of the $2.1 trillion stock market, leading to some concern the island’s economy is too dependent on a single firm.
“There are different perspectives towards TSMC,” Peng said. “Some might be proud of it, some might worry it’s too big — what we hope is to have more companies like it.”
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