| Summary: | 碩士 === 銘傳大學 === 財務金融學系碩士在職專班 === 104 === With more and more flexible policy, Taiwanese government has been encouraging foreign capital into Taiwan to activate its stock market. Therefore, the proportion of the foreign ownership as well as the proportion of Taiwan stock in the secondary market trading continues to increase, proximately one third of Taiwan stock market. We’d like to understand the significance of foreign investment in Taiwan stock market and also, whether it can be an important indicator for local investors to invest their money.
We analyze the motivations that foreign capital invests Taiwan Stock market. One is that foreign investment is optimistic about the prospects of Taiwan stock market. The other is that those investors can earn profit from the exchange rate difference. There are four possible foreign investments:
- The prospect of Taiwan stock market and the appreciation of New Taiwan dollars
In this case, the proportion of the foreign investments into the stock market will rise
- Not optimistic about Taiwan stock market and the appreciation of New Taiwan dollars
In this case, the proportion of the foreign investments into the stock market will slightly fall
- The prospect of Taiwan stock market and the depreciation of New Taiwan dollars
In this case, the proportion of investment in the stock market is slightly increasing but the inward
Remittance of the foreign capital in the stock market is slightly decreasing.
- Not optimistic about Taiwan stock market and the depreciation of New Taiwan dollars
In this case, the proportion of the foreign investments into the stock market will obviously fall
When foreign investors overbuy or oversell their stocks, the optimism and the degree of the cumulative amount of change has causal relationship literally. Sometimes it is positive, whereas sometimes it is negative. It indicates the foreign investors will adjust the invest policy under the consideration of the current or the last Weighted Price Index of the Taiwan Stock Exchange. We believe that this can be an important reference for the locals to invest in the stock market. As for the rate exchange of the last month, it is actually affected by the foreign investment optimism, the degree of the difference of the foreign investment optimism and the Weighted Price Index of the Taiwan Stock Exchange.
This study set the optimistic indicator of foreign investment toward Taiwan stock market. Also, we examine it through the empirical verification regression models to explore the relevance of foreign optimistic about the Taiwan Weighted Index and the exchange rate. The empirical results show that there is no significant data for the foreign optimism and the degree of (O, DO, OT_1, DOT_1 ) the amount of change each month accumulated; however, there is more significant data for foreign investors optimistic and the degree of (OTOTAL, DOTOTAL, OTOTAL_1, DOTOTAL_1 ) the cumulative amount of change. Therefore, it has more reference value.
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