The committee of the National Stabilization Fund (國安基金) yesterday decided not to enter the market to prop up share prices, which have been taking a beating amid concerns over more aggressive US Federal Reserve monetary policy to deal with skyrocketing inflation.
In a statement released after the committee’s meeting, the Ministry of Finance said that despite external factors, the nation’s economic fundamentals remain sound and it was not necessary for the stabilization fund to intervene in the market at this time.
The NT$500 billion (US$16.77 billion) stabilization fund was set up by the government in 2000 to serve as a buffer against unexpected external factors that might disrupt the local bourse.
The nation’s exports are still growing, registering a 15.2 percent year-on-year increase last month to US$42.2 billion, which was the 24th consecutive month of year-on-year growth, the ministry said.
The nation’s economy is expected to grow 3.91 percent this year, the Directorate-General of Budget, Accounting and Statistics has forecast, which is higher than the 2.9 percent estimate for the global economy, as projected by global information services firm IHS Markit in May, it said.
In addition, companies listed on the main board and the over-the-counter market posted combined sales of NT$3.48 trillion for May, which was a monthly high, and falling share prices have made the local equity market more attractive, it added.
Furthermore, with the number of daily domestic COVID-19 cases falling, domestic demand is expected to improve, the ministry said.
However, the stabilization fund committee would continue to monitor stock market fluctuations, it said.
The last time the fund intervened was March to October 2020, when investor confidence was being battered in a market roiled by the COVID-19 pandemic.
After the entry of the fund, the TAIEX soared 4,274.57 points, or 49.24 percent, from a low of 8,681.34 on March 19 to 12,955.91 on Oct. 12.
The stabilization fund bought only NT$757 million of shares during that period, as the market was boosted largely by foreign fund inflows.
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