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🇹🇼 Taiwan /Economy & Trade

Taiwan's stock market may be overheating, but AI has support, says Central Bank chief

From Liberty Times · () Chinese

Translated from Chinese, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Taiwan's stock market may be overheating, but AI stocks have fundamental support, according to Central Bank Governor Yang Chin-long.
  • Yang advised investors against excessive leverage, noting that recent foreign investor sell-offs are likely profit-taking.
  • He addressed concerns about the "four loans for one home" phenomenon, suggesting it's exaggerated and that banks have risk controls in place.

Taiwan's stock market may be approaching a fever pitch, but Central Bank Governor Yang Chin-long stopped short of declaring it overheated, citing fundamental support, particularly in the AI and information technology sectors. He urged investors to exercise caution and avoid excessive leverage.

Speaking at a legislative finance committee hearing, Yang acknowledged that while he is not a stock market expert, the market's performance is influenced by global trends, including the U.S. stock market and the Philadelphia Semiconductor Index. He noted a slight decrease in recent trading volumes. "I cannot make that conclusion," Yang stated when asked if the market was overheated, but he stressed the importance of investors not over-leveraging to mitigate financial risks.

I cannot make that conclusion.

— Yang Chin-longCentral Bank Governor Yang Chin-long responds to a question about whether Taiwan's stock market is overheating.

Lawmakers raised concerns about a phenomenon dubbed "four loans for one home," where a significant amount of funds, including mortgages, stock financing, personal loans, and equity-backed loans, are flowing into the stock market. Yang suggested this term might be exaggerated, explaining that banks' credit assessment processes typically prevent individuals from taking on excessive multiple loans for stock investment. He indicated that while such a situation might exist, its prevalence is likely low.

Regarding the recent substantial sell-off by foreign investors, which has seen them divest over NT$800 billion from the Taiwanese stock market, Yang characterized it as "profit-taking." He also noted that the central bank intervened in the foreign exchange market in the first quarter, selling approximately $12.5 billion USD (about NT$400 billion), largely due to foreign capital flows. Foreign capital outflows continued into the second quarter.

I believe it is profit-taking.

— Yang Chin-longCentral Bank Governor Yang Chin-long explains the recent sell-off by foreign investors in the Taiwanese stock market.
DistantNews Editorial

Originally published by Liberty Times in Chinese. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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