Foreign investment in Taiwan’s stock market remains robust, as evidenced by recent reports from the Financial Supervisory Commission (FSC). On October 4, the FSC announced a net inflow of $1.531 billion for September alone, bringing the total net inflow for the first three quarters of the year to over $29.523 billion. This figure, approximately NT$934.4 billion at the exchange rate of NT$31.651 to USD at the end of September, marks a historic high for this timeframe and raises total foreign investment in Taiwan to $275.018 billion, equivalent to more than NT$8.7 trillion.

An official from the FSC highlighted that even though foreign investors sold shares in listed companies during September, the overall net inflow demonstrates that they have not fully pulled out their investments. This hints at continued strong momentum for future funding.

Data reveals that in the first three quarters, foreign investors collectively sold off stocks worth NT$489.613 billion, marking it the fourth largest sell-off for this period. In September alone, the sell-off reached NT$80.998 billion, ranking as the third largest in September history.

It’s crucial to note that the FSC’s net inflow calculations focus on the “asset side” of foreign investment, primarily tracking the movement of the principal amounts rather than the “cash flow” figures monitored by the Central Bank for outward transfers. This distinction means that while the principal from foreign investments in Taiwan is climbing, profits from stock sales are creating net outflows, which are reflected in the Central Bank’s data concerning capital outflows and stock sell-offs.

Throughout the latter half of the year, foreign investments experienced a net inflow exceeding $6.6 billion in June. However, July brought global market volatility, leading to a net outflow of $5.702 billion. As market conditions stabilized, September saw a net inflow of $1.531 billion, following an inflow of $1.42 billion in August.

The FSC official reiterated that despite sell-offs in August, the principal from foreign investments still indicated a net inflow. This trend suggests that while foreign investors were divesting shares, they had not withdrawn their initial capital, a pattern that continued into September and reinforced the notion that foreign investment momentum remains strong despite two consecutive months of net selling.

According to the FSC’s Securities and Futures Bureau, domestic listed companies reported total revenue of NT$27.53 trillion in the first eight months of this year, the second highest for this period historically, reflecting an increase of 11.93% year-on-year. By the end of August, the price-to-earnings ratio for Taiwan’s stock market was approximately 21.71, with a cash dividend yield of 2.43%, which rises to 2.54% when factoring in stock dividends. The total revenue for listed companies in these eight months was a historical record, just shy of the NT$27.54 trillion achieved in the same period in 2022.

In discussing “net buying” or “net selling,” these terms refer to foreign investors’ activities in the Taiwanese stock market, typically expressed in terms of capital entering or exiting the concentrated market of listed companies. The FSC also provides statistics on overall trading activities across both listed and over-the-counter markets. Meanwhile, net outflows and inflows indicate the difference between foreign capital influx and outflux. Both net buying/selling and net inflow/outflow figures are vital indicators for tracking foreign investment trends.