Recent sales of stocks by overseas investors are a “short-term phenomenon” that do not represent a bearish view, with foreign holdings having been on an upward trend in the past few years, the Financial Supervisory Commission (FSC) said yesterday.
Foreign investors account for about 42 percent of Taiwan’s stock market, FSC Chairman Peng Jin-lung (彭金隆) said in an interview in Taipei.
That is up from 37.5 percent in 2022, he said.
Photo: An Rong Xu, Bloomberg
“Our total market cap is increasing, and foreigners maintaining their holdings at this level means their investments are increasing,” Peng said. “Are foreign investors retreating from Taiwan? We can’t tell — we only know that trading frequency is increasing.”
The TAIEX has dropped nearly 9 percent from its record close on July 11, with some investors concerned after former US president and Republican presidential candidate Donald Trump cast doubt over his commitment to defending Taiwan.
Still, the index is up about 24 percent this year, as investors pile into its suppliers of advanced computer chips used in everything from smartphones to artificial intelligence (AI).
The FSC is sketching out several scenarios that might emerge from the US election, but declined to elaborate or comment on the parties or candidates, Peng said.
“It’s not about who will win the US election, its about how their future policy could affect our industries,” he said.
Market sentiment that Trump would win back the White House surged earlier this month after an attempted assassination and his formal nomination, but US Vice President Kamala Harris, the likely Democrat nominee, has closed the gap with him in recent polls.
This year’s rally in Taiwan’s market, among the strongest in Asia, has been buoyed mostly by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major supplier of tech giants such as Apple Inc and Nvidia Corp, as well as other semiconductor shares riding on the global AI wave. TSMC alone accounts for 34 percent of the US$2.1 trillion stock market.
“It’s a common concern that our market trading is concentrated in a certain sector [such as chips], but that’s not a rare phenomenon in international markets,” Peng said.
“For example, Samsung is in the same situation in South Korea,” he said.
“There are different perspectives toward TSMC,” Peng said. “Some might be proud of it, some might worry it’s too big. What we hope is to have more companies like it.”
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