Labor funds suffer over NT$470 billion in losses as of end-March

Taipei,  A group of labor funds managed by the Bureau of Labor Funds had suffered massive losses of more than NT$470 billion (US$15.67 billion) as of the end of March, when equity markets at home and abroad plunged amid an escalation of the COVID-19 coronavirus.

In a statement, the bureau under the Ministry of Labor said Friday the labor funds, including the Labor Insurance Fund, the Labor Pension Fund, and the Employment Insurance and Wage Arrears Payment Fund, posted a combined loss of NT$471.2 billion, with a return of minus 11.16 percent at the end of March.

During that month, the benchmark weighted index on the Taiwan Stock Exchange, or Taiex, shed 1,584.11 points, or 14.03 percent, as the virus escalated in the United States and European countries, particularly Italy and Spain.

The bureau said that as many major economies moved to impose lockdowns in efforts to contain the disease, it caused a scaleback of production, undermined the global supply chain and hurt consumption, which plunged financial markets worldwide downward in the month.

In addition to the weakness of the equity markets, the global bond market also took a beating, which also forced the labor funds managed by the bureau into the red in March, as investors preferred to hold on to as much cash as possible, it said.

As of the end of March, the new Labor Pension Fund, launched in July 2015, posted a return of minus 11.37 percent, while the original Labor Pension Fund saw a return of minus 13.37 percent, and the Employment Insurance Fund suffered a return of minus 10.33 percent, according to the bureau.

The bureau said it will watch the pandemic development closely and increase its efforts in risk control as it continues to manage the labor funds.

The silver lining is that many countries have come up with alternative monetary and fiscal measures to boost their economies, which could stabilize the financial markets, it added.

In addition, the bureau went on, as the virus spread has been showing signs of easing, with many countries coming out of lockdown, the global financial markets are expected to improve further.

Market analysts said that if the financial markets bounce back in the near future, these labor funds could see their returns rising, cutting their future losses.

In April, the Taiex staged a rebound, rising to 13.23 percent.

Source: Focus Taiwan News Channel

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