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FSC urges investors not to panic in wake of stock market plunge

2018/10/11 21:17:56

Taipei, Oct. 11 (CNA) The Financial Supervisory Commission (FSC) said Thursday that investors should not panic over the steep drop in Taiwan shares earlier in the day because the country's economic fundamentals remained sound.

Following a plunge on Wall Street Wednesday, the Taiwan Stock Exchange Weighted Index (Taiex) plummeted 660.72 points, or 6.31 percent -- its steepest fall in history -- to close below the 10,000-point mark at 9,806.11.

The FSC, however, urged investors to stay calm, saying it will take steps to allay their fears.

Taiwan's economic fundamentals remain sound and healthy, the FSC said, adding that it will encourage companies to buy back their shares and will help them organize performance review meetings to allow the public to pick a good time to invest.

According to the FSC, 12 companies listed on the main board and 18 companies listed on the over-the-counter (OTC) market have been invited to hold business review meetings in the fourth quarter.

In addition, 471 companies listed on the broader market and 110 on the OTC market are also slated to hold investor conferences in the fourth quarter, it said.

Stressing that Taiwan's economy remains in a good shape, the FSC said pre-tax profits of companies listed on the main board and the OTC market totaled around NT$1.154 trillion (US$37.2 billion) in the first half of the year-- a 20.61 percent year-on-year increase.

In the first eight months of the year, the companies recorded a consolidated revenue of NT$2.151 trillion -- 10.21 percent higher than in the same period of 2017, the FSC said, adding that their September figures also indicated growing revenue and profits.

Although the Taiwan stock market suffered its biggest single-day loss Thursday, the high turnover of NT$205.3 billion indicated that investors were willing to invest in the local bourse even as it was sinking, the FSC said.

Meanwhile, Vice Premier Shih Jun-ji (施俊吉) told CNA that the state-run National Stabilization Fund (國安基金) has decided not to intervene in the local stock market for the time being because of the sound fundamentals and high dividend yields and P/E ratios but the government will keep a close eye on the market's movements.

In the wake of the Dow Jones Industrial Average's plunge of 831 points in the U.S. Wednesday, the local market opened down 194.79 points at 10,272.04 Thursday and dropped below 10,000 points in 90 seconds.

Amid lingering fears over escalating fund outflows, the Taiex continued to fall, plunging by 668 points at one point, and by the close had lost 660.72 points, its biggest single-day drop in history.

With the steep slide, the total market capitalization of the local equity market shrunk by NT$1.98 trillion to less than NT$30 trillion, translating into an average loss of NT$200,000 for each retail investor.

(By Tian Yu-pin and Flor Wang)