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Foreign net fund inflow tops US$4 billion in October

2019/11/09 14:29:50

Taipei, Nov. 9 (CNA) Foreign institutional investors recorded a net fund inflow of more than US$4 billion in October alone as the local equity market made a strong showing, according to the Financial Supervisory Commission (FSC).

Data compiled by the FSC, the top financial regulator in Taiwan, showed foreign institutional investors registered a net fund inflow of US$4.28 billion or about NT$130 billion into Taiwan, the highest net fund inflow in 21 months.

The massive foreign fund inflow served as a driver for the solid gains enjoyed by the local stock market in the month which saw eased trade friction between the United States and China spur hopes that both would sign a phase one deal to resolve their disputes, market analysts said.

In October, the benchmark weighted index on the Taiwan Stock Exchange rose 509.03 points or 4.89 percent as foreign institutional investors expanded their appetite to take risks to pick up local tech heavyweights, including contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC).

TSMC, the most heavily weighted stock in the local market, even soared 9.74 percent in October.

In the local over-the-counter (OTC) market, the index also rose more than 3 percent last month due to the foreign fund inflow, analysts said.

The October net fund inflow was about US$1.28 billion higher than September's figure, the FSC said. The net fund inflow registered in September reversed a net fund outflow in the previous months, when an aggregate fund outflow totaled about US$9.88 billion.

Since the government lifted a ban on foreign institutional investments on the local bourse at the end of 1990, foreign institutional investors have accounted for an accumulated US$206.63 billion in net fund inflows into Taiwan.

In the first 10 months of this year, foreign institutional investors registered a net buy of NT$133.51 billion (US$4.39 billion) worth of shares on the main board and a net buy of NT$20.72 billion worth of shares on the OTC market, the FSC data showed.

Due to the massive foreign fund inflow in October, the holdings of Taiwanese stocks, bonds and Taiwan dollar-denominated deposits by foreign investors in the country's foreign exchange reserves rose by US$35.7 billion from a month earlier to US$416.8 billion as of the end of October, the central bank said.

As a result, foreign-held assets at the end of October were equal to about 88 percent of Taiwan's foreign exchange reserves, up 7 percentage points from a month earlier, the central bank said. The October ratio hit a new high in 19 months, the bank added.

As of the end of October, Taiwan's forex reserves stood at US$472.48 billion, up US$2.99 billion from a year earlier, data released by the central bank showed. It was the fifth consecutive month for Taiwan to report a record high in foreign reserves.

In addition to massive foreign fund inflows, the central bank said the increase in forex reserves in October largely resulted from a rise in returns in the bank's investment portfolio to manage the huge foreign reserves.

In October, the central bank said, the appreciation of the euro and other major currencies against the U.S. dollar contributed to the increase in Taiwan's forex reserves as non-greenback denominated assets were converted into U.S. dollar terms.

Due to the large foreign fund inflow, the Taiwan dollar rose 1.9 percent against the U.S. dollar in October.

(By Liu Pei-cheng, Pan Tzu-yu and Frances Huang)
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