Accumulated net fund inflows to Taiwan hit high at end of March

Taipei--Accumulated net fund inflows into Taiwan hit a new record high at the end of March after foreign investors rushed to move funds into the country last month, according to the Financial Supervisory Commission (FSC).

Since the government lifted a ban on foreign institutional investments on the local bourse at the end of 1990, foreign institutional investors have accounted for an accumulated US$208.65 billion in net fund inflows into Taiwan as of the end of March, up from US$205.33 billion seen at the end of February, the FSC said.

Citing statistics, the FSC, the top financial regulator in Taiwan, said that the record high accumulated net foreign fund inflows came after foreign institutional investors made US$3.32 billion in net fund inflows in March, a new monthly high since June 2016, when the figure stood at US$4.05 billion.

March was the third consecutive month for foreign institutional investors to record a net fund inflow into Taiwan, and the aggregate inflows in the first quarter totaled US$9.28 billion, the data showed.

Market analysts said that the move by foreign institutional investors to remit large amounts of funds into Taiwan served as one of the most important drivers of the gains posted by the local equity market in the January-March period.

In the three-month period, the weighted index on the Taiwan Stock Exchange rose almost 560 points or about 6.04 percent on the back of ample liquidity from the fund inflows.

During the same period, foreign institutional investors bought a net NT$165.66 billion (US$5.41 billion) worth of shares on the main board, the FSC data indicated.

The strong showing in the first quarter paved the way for the local index to challenge the 10,000-point mark. On Friday, the main board closed at 9,873.37 points.

Also on the back of large foreign fund inflows, the Taiwan dollar appreciated more than 6 percent against the U.S. dollar in the first quarter, the highest quarterly growth in nine years.

To avoid being labeled a currency manipulator by the U.S. in its upcoming report in mid-April, Taiwan's central bank has avoided intervening as it has done in the past to keep the Taiwan dollar value weaker, analysts said.

At the same time, many investors fear that exports-oriented high-tech companies will report foreign exchange losses for their first quarter results due to a stronger Taiwan dollar.

In addition to the bellwether electronics sector, investors also have concerns that life insurers which own a large chunk of foreign currency-denominated assets overseas have become the victims of a stronger Taiwan dollar.

The FSC data showed that the Taiwan dollar appreciated about 2.4 percent against the U.S. dollar in 2016. As a result, the companies listed on the local main board suffered a combined NT$133.9 billion in foreign exchange losses in the year.

The upcoming earnings season will kick off later in the month with contract chip maker Taiwan Semiconductor Manufacturing Co. (???) and smartphone camera lens supplier Largan Precision Co. (???) scheduled to hold their own investor conference on April 13.

Source: Focus Taiwan News Channel