Taiwan's economic fundamentals good, not panic, says FM

TAIPEI: Taiwan's economic fundamentals are good and investors should remain calm and rational, not panic, Deputy Finance Minister Frank Juan told Reuters on Friday after a large fall in share prices including by top chipmaker TSMC.

Taiwan's benchmark stock index closed down 3.3 per cent, making it the worst performing market in Asia on Friday. It is down 21 per cent this year. The Taiwan Semiconductor Manufacturing Co Ltd TSMC, the world's largest contract chipmaker, fell by 4.7 per cent.

Juan said Taiwan's economic fundamentals were good, especially its trade numbers and revenue figures for listed firms.

The stock market's fall today is a bit overreaction and a bit panicked. He said that you should be calm, rational, and don't panic.

Taiwan's stock has fallen deeper today than South Korea and the United States. The stock market should return to fundamentals because of the psychological panic. Juan, who heads the fund that the government uses to intervene in the market if there is a large amount of volatility, said if there is a need, the National Stabilisation Fund can meet to discuss measures for the market.

Policymakers have lowered Taiwan's economic growth outlook for this year to less than 4 per cent, after previously predicted it would grow more than 4 per cent.

The trade-dependent island has been hit by global inflation, the war in Ukraine, snarled supply chains and falling demand for tech-related products.

A significantly less than expected business outlook by memory-chip firm Micron Technology Inc on Thursday raised concerns that the industry was turning towards a down cycle after nearly two years of strong demand.

On Friday there was a sell-off in some Taiwan tech stocks because of that. MediaTek Inc, the world's fourth-largest chip designer by revenue, ended up down 6 per cent.

Jeff Chang, chairman of Cathay Securities Investment Trust, said there was no problem with the fundamentals of the semiconductor industry.

There is still a large demand for electric and smart vehicles, and built-in demand for 5 G and high-speed computing is going forward, he said.

Juan said Taiwan was doing better economically than other parts of Asia.

The GDP growth rate for this year is expected to reach 3.91 per cent, and the growth rate has been slightly revised down, according to the Directorate General of Budget, Accounting and Statistics. In late May, the statistics office forecast was down from the 4.42 per cent growth forecast in February.

The second quarter GDP data will be released at the end of July.