Taiwan Today

Taiwan saw a net inflow of foreign capital amounting to NT$227 billion (US$7.066 billion) for September, the highest monthly level in the last 19 months, according to the latest tallies released by the Financial Supervisory Commission Oct. 5. The commission’s Securities and Futures Bureau said the figure reflects foreign investors’ optimistic outlook for Taiwan’s stock market. The ratio of foreign shareholdings on the local bourse currently stands at about 30.1 percent, according to the bureau. As for transaction volume, the ratio of transactions involving foreign investors averaged roughly 16 percent for the first nine months of this year, lower than the figure of 24.3 percent for last year. However, the ratio has rebounded to about 20 percent since the start of October, officials said. The weighted index of the Taiwan Stock Exchange, the island’s main board, closed at 7,437.98 on Oct. 5, up 26.10 points from the previous session. The bureau’s tallies show that for the first nine months of this year, foreign investors’ net purchase of stocks on the main bourse amounted to NT$371.9 billion, while the figure for the over-the-counter market for the same period reached NT$16.2 billion. Since Taiwan opened to foreign investment at the end of 1990, accumulated net inflow of foreign capital had reached US$143.567 billion as of the end of this September, up US$7.066 billion from US$136.501 billion at the end of the previous month, according to FSC statistics. It marked the highest monthly increase since February 2008 when net foreign capital inflow amounted to US$7.25 billion for the month. The ensuing global financial tsunami then led to several months of net outflows of foreign capital until March of this year when Taiwan registered a net inflow. The amount, however, was relatively low. With continued net inflows of foreign capital in September, Taiwan’s foreign exchange reserves hit a record high amount of US$332.239 billion at the end of the month. The figure marked an increase of US$6.822 billion over August’s level. Lin Sun-yuan, director-general of the Central Bank of the Republic of China’s Department of Foreign Exchange, attributed the rise to earnings from foreign exchange reserve management as well as the strong appreciation of major currencies that it holds, including the euro and Japanese yen, against the U.S. dollar. The nation’s foreign exchange reserves have continued to rise for 11 consecutive months. Taiwan ranks as the world’s fourth largest holder of forex reserves, behind mainland China, Japan and Russia.