With panic sentiment dominating global stock market due to the Russia-Ukraine conflict, eyes are on whether and how Taiwan government will intervene. Huang Tien-mu, chairperson of the Financial Supervisory Commission, said that while short-term fluctuations are inevitable, Taiwan's fundamentals remain solid in the long run.
Lai Shyh-bao, Legislator (KMT): “May I ask you, Chairman, is this a stock market disaster? ”
Huang Tien-mu, Chairperson, FSC: “I think it is indeed a shock, a very big shock.”
Taiwan stocks have fallen by thousands of points in the past three days. Some legislators believe that it can almost be regarded as a "stock crash." However, on the 9th, Taiwanese stocks fell and rebounded, rising more than 200 points during the session, reaching an intraday peak of 17,071 points. It closed above the 17,000 level. As of 10:30 a.m., trading volume exceeded NT$160 billion.
Lai Shyh-bao, Legislator (KMT): “The Bank of Taiwan bought more than NT$10 billion yesterday. The day before yesterday, they also bought more than NT$10 billion. The government is already protecting the market.”
Juan Ching-hwa, Deputy Minister of Finance: “ Each government-owned bank has its own operation team that can judge itself.”
Juan, a trader with the National Financial Stabilization Fund and Deputy Finance Minister stressed that he had not received any instructions to support the market. However, if there is an irrational decline in Taiwan stocks, it is not ruled out that an extraordinary meeting will be held to stabilize the stock market as soon as possible. Recently, Taiwanese stocks have become an ATM for foreign investors, being oversold for five consecutive days, at a cumulative amount of NT$198.2 billion. However, domestic mutual funds were net buyers in March, but its cumulative amount was only NT$20.9 billion. Huang Tien-mu, the chairperson of the Financial Supervisory Commission, spoke with confidence, emphasizing that Taiwan's stock fundamentals are good.
Huang Tien-mu, Chairperson, Financial Supervisory Commission: “Funding momentum is strong. The stock market is still based on fundamentals. Of course, short-term volatility is inevitable.”
According to FSC statistics, the amount of domestic financial institutions' risk exposure to the Ukraine war exceeds NT$200 billion. The life insurance industry has the largest exposure amount of NT$138.2 billion, which is invested mainly in Russian bonds. However, this only accounts for 0.46 percent of the domestic insurance industry's funds, which has little impact. In addition, the investment amount from domestic banks and mutual funds is not large.
Wu Ping-jui, Legislator (DPP): “So how do you calculate the value of Russian government bonds there were already bought? ”
Huang Tien-mu, Chairperson, FSC: “They have to adjust according to accounting standards to show this loss. These Russian sovereign bonds met investment criteria before the war. Their investment allocation is not high.”
But some legislators pointed out that although the domestic financial industry has little impact, some small and medium-sized domestic enterprises that export tool machines to Russia have seen a significant impact. The Ministry of Finance said that if there is a cash flow problem, loan interest extensions will be provided.