2024-04-05 16:00:00
2024-04-06 00:00 Lianhe Daily Lianhe Daily Editorial 00939 and 00940 launched their fundraising in March, attracting many investors who have no experience in investing in ETFs. Securities accounts in March…
Recently, the raising of multiple ETFs (index stock funds) including 00940 and others has caused a whirlwind in Taiwan’s capital market. In the 2009-40 period alone, 170 billion yuan was raised, which is equivalent to one-third of the size of the National Security Fund. In recent years, large-scale ETF funds have entered and exited Taiwanese stocks, often operating hundreds of billions of dollars in huge amounts, which not only affected the trend of the market, but also had a considerable impact on the stock prices of the investment target stocks. From the central bank to the Financial Supervisory Commission, everyone has noticed this investment boom and reminded investors to pay attention to risks.
Most of this wave of hot-selling ETF products demand high dividends. Compared with single stocks, they give investors a sense of lower risk and stable investment performance, which is the main reason for the hot sales. Central Bank President Yang Jinlong warned that ETFs have the risk of helping to rise and fall. Everyone is going up now, and everyone may come down together in the future. In particular, financial markets are prone to mass effects, with people jumping in like a herd. The risk of following the herd is worth paying attention to. Yang Jinlong’s early warning was well-earned. On the first day of listing, ○○940 fell below the issuance price, which means that investors who wanted to make short-term profits did not realize their dreams.
Behind this ETF chaos, there is another deeper hidden worry, which is the proliferation of hot money with nowhere to go. Chinese people are rushing to buy ETFs. In addition to the low domestic savings interest rate and the “herding effect”, the other reason is that people lack confidence in the economic prospects and can only rely on financial products with stable investment returns. my country’s excess savings are expected to reach three this year. A historical high of 84 trillion yuan; on the other hand, the private investment growth rate this year is estimated to be only 1. Thirty-four percent. Although Taiwan has abundant private funds, it cannot find new investment targets. Excessive idle funds, whether they flow to the stock market, real estate market or specific financial products in large quantities, may cause difficulties for the market to digest; at the least, price fluctuations may occur, and at worst, they may cause bubbles.
According to statistics from the General Accounting Office, my country’s household savings have not changed much, but corporate savings have grown rapidly, which can be seen from corporate retained earnings. In 2022, the retained earnings of our listed companies amounted to more than 15 trillion yuan, and these huge funds will be levied a 5% business tax. The original intention of this tax system was to encourage companies to reinvest their surpluses, but due to the rapid changes in the industry, many companies cannot find new investment targets and would rather have their huge retained earnings taxed. If things continue like this, companies will lose their growth momentum, which is definitely not a good thing for economic development.
As private investment stalls, the government lacks an active response and blindly promotes aspects that are beneficial to itself. For example, the government is complacent about Taiwan’s stock market rising above 20,000 points, believing it to be proof that “the economy is the best in 20 years.” It also claims that the semiconductor industry, led by TSMC, has strong momentum and is not concerned about the stagnant investment in other industries. In fact, although the revenue outlook for TSMC and the semiconductor industry is booming, it is not a healthy development trend for Taiwan’s economy to rely on only a few companies and industries to thrive. In particular, many traditional industries are trying to transform. They also have huge funds but cannot find investment directions. The government should make more efforts in this regard.
Presumptive President Lai Ching-te recently embarked on a nationwide “industrial tour” to demonstrate his ambition to expand the economy; however, his plans for an industrial tour do not reveal his overall economic development plan. The first stop of Lai Qingde’s industrial tour was a discussion with the semiconductor industry, followed by defense industries such as drones. The former is just the icing on the cake, while the latter shows the will to “fight China and Taiwan”, but he lacks attention to many industries that are stuck in the bottleneck of development and transformation.
People from all walks of life have repeatedly reminded the Tsai administration that if Taiwan relies solely on the semiconductor industry, it may fall into the “Dutch disease” without realizing it. However, the Democratic Progressive Party government is intoxicated with the prosperity of the semiconductor industry and the Taiwan stock market’s 20,000 points, and has turned a deaf ear to outside suggestions. In the 1980s, Taiwan experienced the phenomenon of “Taiwan’s money flooded its feet” due to the appreciation of the Taiwan dollar, and the stock market and real estate prices soared. However, what followed was the exodus of manufacturing and the hollowing out of industries, and the economy fell into a multi-year low. Nowadays, Taiwan’s money-filled phenomenon has reappeared. If the government blindly uses 20,000 points in the stock market to paralyze itself and does not actively boost private investment, what fruits of economic growth will we be able to harvest in the future?
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