TSMC top pick on stabilization fund list to support market

01/13/2021 07:50 PM
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CNA file photo
CNA file photo

Taipei, Jan. 13 (CNA) Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) was the top pick on the investment list of the National Stabilization Fund, as the fund entered the local equity market in its latest efforts to prop up the market, the fund's committee said Wednesday.

According to the committee, the stabilization fund injected a total of NT$757 million (US$266 million) during the period between March 20 and Oct. 12 in 2020 to reinforce investor confidence in a market in turmoil over the COVID-19 pandemic.

During the period, the fund spent NT$168 million on shares of TSMC, the most heavily weighted stock in the local market, accounting for more than 22 percent of the total investment, making the chipmaker the top investment on the list, the committee said.

The investment in TSMC led to the fund raking in NT$121 million in net profit, plus NT$3.25 million in cash dividends issued by the chipmaker, which represented a return of more than 70 percent.

The fund was authorized by the committee on March 19 to step in as Taiwan's stock market came under heavy downward pressure amid escalating fears over COVID-19, which was sending ripples through the global economy.

It was the seventh time the NT$500 billion fund had jumped into the market to prop up local shares since the fund was established in 2000 by the government to serve as a buffer against unexpected external factors disrupting the stock market.

The stabilization fund only bought shares in the final days of March, and did not make any investments in the second or third quarters, although the fund stayed in the market for more than 200 days.

Since its withdrawal from the market in mid-October, the stabilization fund has sold out the shares it bought during the 207-day period and raked in NT$258 million in net profit, or about 30 percent, in return, the committee said.

The return beat the 6 percent gains posted by the fund in its sixth presence in the market in 2015 and the 8 percent return in its fourth presence in 2011, according to the committee.

During its presence, the weighted index on the Taiwan Stock Exchange, or Taiex, soared 4,274.57 points, or 49.24 percent, from a low of 8,681.34 seen on March 19 to close at 12,955.91 on Oct. 12.

The Taiex continued to move ahead amid ample liquidity, up an additional 2,774.07 points, or 21.35 percent, to end at a historic high of 15,769.98, as foreign investors kept moving funds into the local market.

The committee said the investment in TSMC was the major driver to the fund's gains during its latest efforts to support the equity market.

During the 207-day presence of the fund, TSMC soared about 85.5 percent. Since the fund's withdrawal on Oct. 12, the stock gained an additional 31.5 percent to close at a new high of NT$605.00 on Wednesday.

In addition to TSMC, the stabilization fund also bought 18 other stocks, including metal casing supplier Catcher Technology Corp., contract notebook computer maker Quanta Computer Inc. and iPhone assembler Hon Hai Precision Industry Co., the committee said.

The investment list also covered Fubon Financial Holding Co., Cathay Financial Holding Co., E. Sun Financial Holding Co., Yuanta Financial Holding Co., CTBC Financial Holding Co., Mega Financial Holding Co., Mega Financial Holding Co. and First Financial Holding Co., indicating large-cap financial stocks were also the favorites of the fund, according to the committee.

(By Wu Chia-jung and Frances Huang)


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