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Commercial Times: When will Taiwan's stock index rise again?
Central News Agency
2014-08-12 11:02 AM
Taiwan's stock index hit a five-year high of 9,569 at one point in July. The development sparked a mixed response in the market. While pessimists believed Taiwan's share prices would retreat after making such strong gains, the optimists thought the index would continue to rise and exceed the 10,000-point mark. With Taiwan's economy showing significant improvement since the start of the year, it seems quite reasonable for the stock market to be on the rise. But because Taiwan's stock market is relatively shallow, price fluctuations are often more a reflection of capital movements than of economic fundamentals. During the 10 months ended June 30, foreign institutional investors remitted a net US$25 billion into Taiwan, mainly to invest in stocks. Those same foreign investors began to dump their holdings and cash in their gains on July 31, selling a net NT$10.4 billion in shares on the Taiwan stock exchange that day and driving the benchmark index down by 131.17 points. They launched an even stronger attack on Aug. 5, selling a net NT$17.6 billion in shares. This caused the stock index to tumble 188.75 points to 9,141.44 and brought its fall to approximately 300 points in five trading days. Similarly, the question of when the stock index will rise again will be decided largely by foreign institutional investors. (Editorial abstract -- Aug. 12, 2014) (By Y.F. Low)
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