Complicated reasons exist behind shrinking markets: premier

By Ann Yu, The China Post

“There are many complicated reasons behind the struggling stock markets,” said Premier Sean Chen, hinting the shrinkage of the stocks market value many not completely be attributed to the proposed stock gains tax draft. The market value of Taiwanese stocks as of July 20 had shrunk by nearly NT$3 trillion since March, with securities dealers attributing the drop to a government plan to levy tax on capital gains generated from stock and futures transactions.

The premier mentioned the global financial crisis, the price hike of raw materials, the eurozone debt may all have contributed to the factors of the local struggling markets. “The stock prices have been dropping on an international basis this year. We cannot concentrate only on local markets this month,” Chen said. Chen mentioned the eurozone debt crisis was a long-term problem, which depended highly on the ministers to solve. Following the Greek financial crisis, the European Union’s (EU) heavy loans to Spain brought up another depressing issue, Chen said. He explained that reaching a mutual solution would be difficult since each minister comes from different backgrounds. But Chen showed confidence in the summit, as he stated, “According to experiences, the summit leaders have always demonstrated wisdom and ability to overcome the crisis after a while.” With the shrinking markets of Taiwan displaying uncertainty upon the stock gains tax, local reporters inquired if the National Stabilization Funds would be activated for market liquidity and security. The Premier answered he had not heard of recent reports. He stated that the Vice Premier convenes the National Stabilization Funds meeting after discussions with committee members. “I have not been notified of such meetings,” Chen said.

The TWSC statistics indicate that as of July 20, the average daily stock trading volume reached just NT$89.56 billion, the lowest level since 2006. In addition, Ministry of Finance statistics show that the government’s income from stock transaction tax amounted to NT$38.3 billion in the first half of the year, registering an annual drop of

22 percent. The figure was the lowest since 2006, the statistics show.