TAIPEI : Taiwan’s top financial regulator said on Thursday he was confident in the fundamentals of the island’s stock market despite rising geopolitical risks, adding that in “special circumstances” he would consider measures to protect investors.
Tension between Taiwan and China, which views the democratically governed island as its territory, has risen in the past three years with Beijing staging regular military exercises in Taiwan’s vicinity.
Taiwan’s benchmark stock index fell 22 per cent last year, partially on concern about the rising risk, though also due to aggressive U.S. interest rate increases and U.S. dollar strength as well as worries over slowing global growth.
Huang Tien-mu, head of the Financial Supervisory Commission, said geopolitical risks had some impact on the stock market, but it has seen a 3,000-point rebound from last year’s lows, indicating that it remained resilient and sound.
“I’m certainly confident” in the market’s fundamentals, he told parliament as he responded to questions from members of the legislature.
Taiwan’s stock market does not generally react to spikes in tension with China. On Thursday, the index closed flat despite the defence ministry reporting a second day of large-scale Chinese air force incursions nearby.
Taiwan recorded net inflows of foreign funds in January and February, compared with a total net outflow of T$1.4 trillion ($45.66 billion) in 2022, Huang said.
He said he could not answer as to whether a risk of war with China was the biggest “black swan” – an event that comes as a major surprise or has a major effect – for the stock market, saying that was a theoretical question.
“Under special circumstances, we’d consider special measures to ensure depositors’ confidence in banks and their information security as well as their continued operation,” he said, without elaborating.
($1 = 30.6640 Taiwan dollars)