Foreign held assets down over US$20 billion as of end January

Taipei, Feb. 8 (CNA) Holdings of Taiwanese stocks, bonds and Taiwan dollar denominated deposits by foreign investors as of the end of January had fallen sharply by more than US$20 billion from a month earlier as the local equity market suffered volatility amid panic over the spread of the 2019 novel coronavirus (2019 nCoV), according to the central bank.

Data compiled by the bank showed that foreign held assets at the end of January totaled US$434.8 billion, down US$20.2 billion from the end of December. The latest foreign held assets were equivalent to 91 percent of Taiwan's total foreign exchange reserves at the end of January, the data indicated.

In January, the benchmark weighted index on the Taiwan Stock Exchange fell 4.18 percent from a month earlier, while the Taiex plunged 696.97 points, or 5.75 percent, on Jan. 30, marking the steepest single session drop in points in the country's stock market history, before rebounding in the following session.

The plunge in share prices also dragged down the value of assets held by foreign investors, the central bank said.

The heavy losses sent assets held by foreign investors sharply lower, so that the ratio of foreign held assets to the country's forex reserves also dropped from 95 percent seen a month earlier, the central bank added.

Harry Yen (???), head of the bank's Foreign Exchange Department, said the equity market volatility dampened sentiment among foreign institutional investors who sought a net NT$38.4 billion (US$1.27 billion) worth of shares on the local equity market in January.

Despite the fall in foreign held assets, the central bank said, forex reserves at the end of January recorded a new high of US$479.13 billion, up US$1.005 billion from a month earlier, on the back of an increase in returns from the central bank's forex reserves management.

However, in the wake of a stronger U.S. dollar, the losses suffered by other major currencies such as the euro, the British pound and the Chinese yuan offset the benefits from the central bank's higher investment returns when the forex reserve's non greenback denominated assets were converted into U.S. dollars.

Yen said the central bank has been watching closely the spread of the virus from Wuhan in China's Hubei Province, to gauge whether the local financial market will be able to operate in a stable manner.

In terms of the local foreign exchange market, Yen said the central bank always respects the market mechanism, but if foreign investors inject or take large funds out of the local market suddenly to create market volatility, the central bank will step in to maintain market order.

The central bank has said it is committed to maintaining ample forex reserves by improving investment returns to guarantee secure financial markets at home, even if foreign institutional investors move funds out of the country.

Meanwhile, the Financial Supervisory Commission (FSC), the top financial regulator in Taiwan, said that despite heavy losses on the local equity market in January, foreign institutional investors still registered a net fund inflow of about US$1.29 billion.

Since the government lifted a ban on foreign institutional investments on the local bourse at the end of 1990, foreign institutional investors had accounted for an accumulated US$214.89 billion in net fund inflows into Taiwan as of the end of January, the FSC said.

Source: Focus Taiwan News Channel