The Taiwan Academy of Banking and Finance announced that the Taiwan Financial Risk Index had set a record high in June in nearly 13 months. However, they believe the country's overall financial situation remains stable.
The financial market has become more and more pessimistic about the economic outlook due to continued high inflation and the successive interest rate hikes in various countries. Central banks and international financial institutions have revised down their economic growth expectations. The Taiwan Academy of Banking and Finance announced the Taiwan Financial Risk Index for June was 100.8, up 1.9 from May and hitting a 13-month high. Investors' unease was reflected in the fear index as fears of a recession sweeps the market.
Jerry Lin, Director, Financial Research Institute, TABF: “Taiwanese stocks tumbled in June. Market volatility has greatly increased. Therefore, Taiwan's version of the fear index rose sharply. This is a new high since March 2021.”
TABF stated that Taiwan stocks plummeted in June, bringing the market's price-earnings ratio to a new low since December 2008. The performance of Taiwan stocks has been volatile. The volatility index hit a new high since March 2021, and the risk of price volatility rose sharply to 50.8. The four major U.S. stock indexes were mixed last Friday. The Taipei stock market rose slightly in the morning, but the TAIEX quickly dropped, led by semiconductors, finance, and electronics stocks during the session. The TAIEX dropped as much as 122 points, reaching 14,342. The broader market is still volatile and outside attention is now focused on the National Financial Stabilization Fund's regularly scheduled committee meeting at the Executive Yuan.
Wu Chung-shu, Chairperson, TABF: “Uncertainty about the future remains high. It is necessary for the government to stabilize the market from panic swings. But if the market's reaction is reflecting its future view, then we should respect the market. ”
The TABF believes that although Taiwan's risk index has gradually trended upward in the first half of this year, our country's overall financial situation is still stable compared with risks in overseas markets.