FSC: Foreign Investor Adjustments, Range-Bound Trading Are Normal Operations

(CNA, Taipei, May 20, by reporter Lu Yen-tzu) The Taiwan stock market has recently shown volatile trends, with the market focusing on the adjustment movements of foreign investors. Financial Supervisory Commission (FSC) Vice Chairperson Chen Yen-liang stated today that since the US-Iran conflict, foreign investors have net sold over NT$700 billion in Taiwan stocks, but have recently shifted back to buying, creating a range-bound consolidation pattern, which is a normal operation. The Legislative Yuan's Finance Committee today invited the Ministry of Finance, the FSC, and state-owned banks to give a special report on "Digital Transformation, Talent Recruitment, Employee Rights, and Mid-to-Long-Term Consolidation Planning of State-Owned Financial Institutions." During questioning, KMT Legislator Lai Shyh-bao focused on the issue of foreign investors adjusting their positions in Taiwan stocks, pointing out that they have adjusted over a trillion NT dollars in the past three years. Central Bank Deputy Governor Yen Tzung-ta stated that based on past data, the monthly operations and capital flows of foreign investors vary significantly and are not consistently "one-way" in or out; they currently mainly reflect stock market adjustments. Chen Yen-liang mentioned that to date, foreign investment remains a net inflow, with US$44.2 billion flowing in this year, bringing the cumulative net inflow to US$364.4 billion. Since the US-Iran conflict on February 28, foreign investors have accumulated a net sell-off of about over NT$700 billion, but this does not mean they are "bearish on Taiwan stocks," as they have recently turned back to buying and may now be in a range-bound consolidation. Chen Yen-liang stated that with the Taiwan stock market having risen over 38% since last year, it is a normal operation for foreign investors to make adjustments at this time. When Lai Shyh-bao asked if Chen's statement meant he was not pessimistic about Taiwan stocks, Chen responded that it is not appropriate for the FSC to make stock market predictions. However, based on current fundamentals, as of the end of April, the price-to-earnings ratio of Taiwan stocks was 29.25 times, compared to about 26 times for US stocks and about 21 times for South Korean stocks. As for whether there is a need to be cautious at high levels, Chen stated that the Taiwan stock market is "picky" but not "a picky eater," meaning in a market economy, it will always "pick the good ones." (Editor: Chang Liang-chih) 1150520