TAIPEI (CNA) – Foreign institutional investors in Taiwan recorded a net fund inflow in October, becoming a key factor in boosting local equities and contributing to a higher Taiwan dollar after making a net fund outflow in the previous three months, according to the Financial Supervisory Commission (FSC).
Citing data, the country’s top financial regulator said foreign institutional investors made a fund inflow of US$1.063 billion in October after being responsible for US$2.307 billion in net outflow in September, US$2.93 billion in August and US$940 million in July.
The FSC said that the net fund outflow made in the previous months came after foreign institutional investors pocketed large cash dividends from their equity investments in Taiwan and moved the funds out of the country.
Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), the world’s largest contract chipmaker was one of the listed companies which issued fat cash dividends in reflection of their sound bottom lines.
TSMC gave a total of NT$181.51 billion (US$6.01 billion) in cash dividends in July for its 2016 earnings and most of the funds went to foreign institutional investors who accounted for an 80 percent stake in the company.
Fortunately, the FSC said, foreign institutional investors changed their course in October, resuming their earlier practices of remitting funds into Taiwan to boost the aggregate net fund inflow to the country to about US$8.297 billion during the first 10 months of this year, topping the aggregate net fund inflow of US$5.555 billion seen for the entire 2016.
Due to the resumed net fund inflow as well as rising participation by local retail investors, the weighted index on the Taiwan Stock Exchange gained 409.86 points or 3.95 percent in October.
During the same period, the index on the over-the-counter (OTC) market, where smaller cap stocks are traded, also grew 3.52 percent.
On the back of fund inflows, the Taiwan dollar rose NT$0.1 or 0.33 percent against the U.S. dollar in October.
Since the government lifted a ban on foreign institutional investment in the local bourse at the end of 1990, Taiwan has recorded a total of US$207.67 billion in foreign net fund inflows, the FSC said.
Meanwhile, foreign institutional investors bought a net NT$236.72 billion worth of shares on the local main board and registered a net buy of NT$24.89 billion worth of equities on the OTC market in the first 10 months of this year, the FSC data showed. •
By Tsai Yi-chu and Frances Huang