Taiwan Bond Yield Sinks to Record Low Amid Rout in Global Stocks

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Taiwan’s government bonds rose, pushing the 10-year yield to the lowest on record, as investors sought the safety of sovereign debt amid a global selloff in stocks.

The Taiex index of shares slid 4.8 percent to its lowest close since 2012, after entering a bear market last week as it tumbled more than 20 percent from a 15-year high on April 27. Equities plunged across Asia after U.S. stocks capped their biggest two-day retreat in almost four years on Friday on concern about the global economic outlook.

“The market sentiment is in favor of bonds,” said Aaron Chien, a bond trader at Taishin International Bank in Taipei. “The stock market trend is key to whether bond yields will drop further in the near term.”

The yield on 10-year notes slipped three basis points to 1.09 percent as of 5:02 p.m. in Taipei, according to Taipei Exchange prices. It touched 1.07 percent earlier, the lowest in data going back to March 2002. The island’s currency dropped 0.3 percent to close at NT$32.96 versus the greenback, and reached NT$32.998, the weakest since 2009, Taipei Forex Inc. prices show. It has dropped 1.8 percent in six days.

Taiwan’s Financial Supervisory Commission on Sunday imposed a ban on short-selling of borrowed stocks at prices lower than the previous day’s close. Global investors have pulled a net $1.2 billion from Taiwanese equities so far in August, according to exchange data.

The island’s four large government-managed funds should “step up” investment in listed companies showing good fundamentals, the cabinet said in a statement on its website.

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