Taipei-Taiwan recorded the highest ever net outflow of foreign and Chinese investors’ funds and a new record for the country’s foreign exchange reserves in 2022, government data released on Thursday showed.
Following two months of net foreign fund inflows, foreign investors registered a total of US$780 million in net fund outflows from Taiwan in December, the Financial Supervisory Commission (FSC) said in a statement released that day.
The December figures pushed the net outflow of foreign and Chinese funds in 2022 to US$13.58 billion, the largest amount since the financial regulator started keeping records in 2011, it said.
Huang Hou-ming (???), chief secretary of the FSC’s Securities and Futures Bureau, said the shift from net inflows to outflows in December was perhaps caused by the hawkish stance of the United States Federal Reserve on monetary policy.
Other likely reasons behind the shift included the interest rate hikes by major economies’ central banks as they moved to combat inflation, and foreign investors turning cautious amid uncertainties in local industries, Huang added.
Foreign investors have been cautious since the Russian invasion of Ukraine in late February last year, particularly with the inflationary pressures faced by major economies around the world, as well as the U.S. Federal Reserve’s decision to raise interest rates amid rising consumer prices, he said.
In 2022, the U.S. raised the federal funds rate seven times, pushing it from 0.25-0.50 percent to 4.25-4.50 percent in December amid a sharp year-on-year increase in consumer prices, which hit a high of 9.1 percent in June before falling to 7.1 percent in November.
The central bank in Taiwan only raised key interest rates four times from 1.125 percent to 1.75 percent, while the monthly consumer price index grew between 2.32 percent and 3.59 percent year-on-year during the first eleven months of 2022.
FSC data also showed foreign investors were net sellers of Taiwan Stock Exchange (TWSE)-listed stocks worth NT$1,088.91 billion (US$38.44 billion), and NT$52.597 million in emerging stocks listed on the Taipei Exchange in 2022.
Chinese investors sold a net NT$797 million of TWSE-listed stocks and NT$321 million worth of emerging stocks traded through the Taipei Exchange last year, according to the FSC.
Also on Thursday, the central bank released information on the amount of reserve assets it held at the end of 2022, which grew by US$6.52 billion to a record high of US$554.932 billion.
However, that was the smallest annual increase since 2015, due to volatile financial markets, and the strong U.S. dollar caused by the Federal Reserve’s sharp interest rate hikes, the central bank said.
The central bank’s Department of Foreign Exchange Director General Chiung-Min Tsai (???) said the smaller increase was also caused by interventions in the forex market over the past year, when the Taiwan dollar plunged almost 10 percent against the U.S. dollar.
The Taiwan dollar closed at NT$30.708 against the U.S. dollar on Dec. 30, the last trading session of 2022, down NT$3.018, or 9.83 percent, for the year.
The greenback hit a closing low of NT$27.607 on Jan. 17 and then surged to a closing high for 2022 at NT$32.245 on Nov. 2.
Source: Focus Taiwan News Channel