The Taiwan government’s likely reimposition of a capital gains tax spooked local investors, who sent the benchmark Taiwan Capitalization Weighted Stock Index as much as 3% lower Thursday. The Taiex recovered some ground and ended 1.6% lower at 7639.82 points, as government-backed funds and bargain hunters bought heavyweight stocks, analysts said. The intraday low of 7528.03 was the lowest since Feb. 1.
Thailand acted this week to stem the surging flow of foreign capital into its markets. Will others follow?
CIMB Economic Research says Malaysia is unlikely to take lead from Thailand. “We see no compelling reason for Bank Negara Malaysia to mull such policy actions as the influx of capital inflows were not as large as other countries,” it says, adding that the central bank has built strong market surveillance to track inflows and outflows of private capital in terms of duration.
As well, Malaysia’s domestic financial system is better able to cope with capital flows. “Most importantly, Bank Negara has greater capacity and the instruments to manage the capital flows without having to rely on capital controls, which is highly restrictive and unpopular to investors,” the firm said.
They may also be short-lived, some trader say. Just a day Thailand’s Cabinet approved the package of measures to curb inflows, the Thai baht was barely changed at 30.11 to the U.S. dollar, though up from 30.07 early.
–Elffie Chew and Phisanu Phromchanya</em>
The revised mining tax unveiled by Australia is a big win for the industry and will help entice spooked foreign investors back into Australian mining stocks, Select Equities analyst David Spotswood says on Market Talk.
The government has limited the tax to iron ore and coal mines, cut the rate to 30% from 40%, raised the threshold at which the tax kicks in and made generous concessions on depreciation of assets.
Japanese Senior Vice Minister of Finance Naoki Minezaki said Saturday that the country won’t likely introduce a global bank tax, an idea some of the Group of 20 nations hope to adopt in order to force banks to pay for potential future bailouts.
“We have already gone through the bubble economy ourselves in the past, more than 10 years ago, and we have a deposit insurance scheme which gives good protection,” Mr. Minezaki told reporters on the sidelines of a meeting of G-20 finance ministers and central bankers in the the port city of Busan.
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