Taiwan reported a net foreign fund inflow of US$13.87 billion for the first quarter, the highest for the period over the past 15 years, as investors regained their confidence in local stocks, the Financial Supervisory Commission (FSC) said on Monday.
The figure was the highest since the first quarter of 2008, when net foreign fund inflow totaled US$15.98 billion, commission data showed.
Net foreign fund outflow was US$6.89 billion in the first quarter of last year, the commission said.
Photo: Annabelle Chih, Reuters
It was US$3.82 billion last month, the third consecutive month of net fund inflow, following a net fund inflow of US$2.49 billion in February and an inflow of US$7.55 billion in January, commission data showed.
The FSC attributed the high net fund inflow in the first quarter to foreign institutional investors regaining their interest in local stocks, as they appeared to be more optimistic about Asian markets on the expectation that the US Federal Reserve would slow its pace on increasing interest rates.
Foreign institutional investors, who mostly sold local shares last year, started buying local shares again in the fourth quarter of last year, but bought even more last quarter, the commission said.
They bought a net NT$220.7 billion (US$7.24 billion) in local shares on the main board for the first three months, compared with a net purchase of NT$24.2 billion in the fourth quarter of last year, the data showed.
“US interest rate hikes are the main reason for a record net foreign fund outflow of US$13.58 billion last year, as stock markets usually become weaker amid rate hikes,” the commission said.
“However, as many foreign institutional investors expect the Fed to slow its interest rate hikes this year, they show more preference for stocks — the stock markets in Europe, US and Asia generally picked up in the first quarter,” the commission said.
Foreign institutional investors sold a net NT$7.11 billion in local shares last month after buying a net NT$227.2 billion in the first two months.
“The net selling last month could have been because they had become more conservative in the wake of banking crises in the US, but since we continued to see a net fund inflow last month, it is fair to say that foreign institutional investors are planning to continue investing in local stocks,” the commission said.
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