Taiwan Government Funds to Support Market After Slump (Update1)
By Tim Culpan and Janet Ong
Sept. 16 (Bloomberg) -- Taiwan's government instructed its four major funds and state-owned banks to buy shares to help reverse the stock market's 9 percent slump following Lehman Brothers Holdings Inc.'s bankruptcy filing yesterday.
Taiwan's National Stabilization Fund is also monitoring the situation and may enter the market if there are any ``non- economic influences,'' the Cabinet said in a statement. Banks have ample liquidity and capital, the Central Bank said in a separate release.
Government efforts to support the stock market came after Taiwan's benchmark Taiex index fell to a three-year low. Lehman's bankruptcy filing left Taiwanese companies with NT$80 billion ($2.5 billion) at risk, the financial regulator said yesterday.
``The Lehman crisis has some real impact on Taiwan's financial institutions, as its structured notes may become worthless,'' said Michael On, president of Beyond Asset Management Co. in Taipei, declining to disclose his holdings. ``The panic selling, and government attempts to rescue the market, are signs that the stock market may be near its bottom.''
The government controls the Civil Service Pension Fund, the Labor Pension Fund, the Labor Insurance Fund and the Postal Savings Fund, as well as a special National Stabilization Fund used when the market is threatened by so-called non-economic forces.
Taiwan lenders have total liquidity of NT$5.65 trillion ($175 billion), of which NT$2.06 trillion are deposits with the central bank and NT$3.59 are certificates of deposit issued by the central bank, according to a statement from Taiwan's Central Bank of the Republic of China (Taiwan).
The Taiex index lost 303.64 points, or 5 percent, to 5,748.81 at 10:51 a.m. as the Banking and Insurance sub-index fell to a five-year low. Cathay Financial Holdings Co., the largest financial-services company, fell its 7 percent limit to NT$51.30 for a three-year low after saying its owns NT$1.5 billion of Lehman-related securities.
To contact the reporter on this story: Tim Culpan in Taipei at [email protected]. Janet Ong in Taipei at [email protected]
Last Updated: September 15, 2008 23:19 EDT
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By Tim Culpan and Janet Ong
Sept. 16 (Bloomberg) -- Taiwan's government instructed its four major funds and state-owned banks to buy shares to help reverse the stock market's 9 percent slump following Lehman Brothers Holdings Inc.'s bankruptcy filing yesterday.
Taiwan's National Stabilization Fund is also monitoring the situation and may enter the market if there are any ``non- economic influences,'' the Cabinet said in a statement. Banks have ample liquidity and capital, the Central Bank said in a separate release.
Government efforts to support the stock market came after Taiwan's benchmark Taiex index fell to a three-year low. Lehman's bankruptcy filing left Taiwanese companies with NT$80 billion ($2.5 billion) at risk, the financial regulator said yesterday.
``The Lehman crisis has some real impact on Taiwan's financial institutions, as its structured notes may become worthless,'' said Michael On, president of Beyond Asset Management Co. in Taipei, declining to disclose his holdings. ``The panic selling, and government attempts to rescue the market, are signs that the stock market may be near its bottom.''
The government controls the Civil Service Pension Fund, the Labor Pension Fund, the Labor Insurance Fund and the Postal Savings Fund, as well as a special National Stabilization Fund used when the market is threatened by so-called non-economic forces.
Taiwan lenders have total liquidity of NT$5.65 trillion ($175 billion), of which NT$2.06 trillion are deposits with the central bank and NT$3.59 are certificates of deposit issued by the central bank, according to a statement from Taiwan's Central Bank of the Republic of China (Taiwan).
The Taiex index lost 303.64 points, or 5 percent, to 5,748.81 at 10:51 a.m. as the Banking and Insurance sub-index fell to a five-year low. Cathay Financial Holdings Co., the largest financial-services company, fell its 7 percent limit to NT$51.30 for a three-year low after saying its owns NT$1.5 billion of Lehman-related securities.
To contact the reporter on this story: Tim Culpan in Taipei at [email protected]. Janet Ong in Taipei at [email protected]
Last Updated: September 15, 2008 23:19 EDT
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