Foreign investors net sellers of Taiwan shares in 2020

Taipei,  Foreign institutional investors were net sellers of shares in Taiwan in 2020 despite a 23 percent rise in the Taiwan Stock Exchange’s benchmark index, the Taiex, during the year.

They sold a net NT$540.15 billion (US$19.23 billion) in shares in 2020, after being net buyers of NT$244.16 billion in shares in 2019, according to data compiled by the TWSE.

The net sell amount in 2020 was even higher than the net sell of NT$358 billion in 2008 when the global financial crisis hit, TWSE data showed.

In 2020, the Taiex rose 2,735.39 points, or 22.8 percent, from a year earlier to close at a historical high of 14,732.53 on Thursday, the last trading session of that year.

Foreign institutional investors aggressively sold shares in Taiwan in March, recording a net sell of NT$359.1 billion, when an escalation of the COVID-19 pandemic in the West took a toll on global stock markets.

The Taiex fell to 8,681.34, the lowest level for the year, on March 19.

On March 20, the National Stabilization Fund was authorized by the fund committee to enter the market to prop up local share prices and bolster market confidence, helping the market recover.

In April, foreign institutional investors shifted to the buy side, recording a net buy of NT$20.7 billion in shares, the data showed.

After a net sell of NT$151.7 billion in May, foreign institutional investors bought a net NT$90 billion in shares combined in June and July.

Analysts said that along with strong buying by local retail and institutional investors because of Taiwan’s strong efforts in fighting COVID-19, foreign institutional investor buying helped vault the Taiex over the 12,000-point mark in early July.

Foreign institutional investors shifted to the sell side again in the following three months, registering net sells of NT$62.6 billion in August, NT$55 billion in September and NT$14.3 billion in October, TWSE data showed.

Starting from November, however, foreign institutional investors became aggressive buyers again before the Christmas and New Year holidays approached as political uncertainty caused by the U.S. presidential election was removed.

They registered net buys of NT$109 billion and NT$55.6 billion, respectively, in November and December, the data showed.

Though, foreign institutional investors were net sellers of shares in 2020, the Taiex soared largely on the strength of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted index on the local market.

TSMC rose almost 60 percent from a year earlier in 2020 to close at a historical high of NT$530.00 on Thursday, contributing about 62 percent, or 1,700 points, of the rise in the Taiex during the year on its own.

Cathay Futures Consulting said the buying by foreign institutional investors seen in the last two months of last year is expected to continue after they return from the year-end holiday as they build up their positions following last year’s net sell.

 

Source: Focus Taiwan News Channel

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