Financial Supervisory Commission (FSC) Chairman William Tseng says that foreign investors remain one of the major uncertainties for the stock market.
The volume of foreign funds in the local stock market has been hitting a record high recently. As of May 4, foreign funds in Taiwan have reached more than US$203 billion. On Wednesday, FSC chief William Tseng said that a large amount of foreign funds could create risks for local investors.
“There are two types of foreign funds," said Tseng. "One is retirement funds that have a long term stake in Taiwan. The other type is hedge funds that are looking for short term profits. So if there is a hike in interest rates, hedge funds will leave Taiwan. I don’t want to alarm investors, but I believe that investment always comes with risk. Foreign funds remain one of the uncertainties for the local bourse.”
Tseng said quantitative easing measures in Europe have been injecting liquidity into the global market. The FSC chief believes many foreign funds are attracted by Taiwan stocks’ high earning-per-shares ratio.