Taiwan Central Bank Governor Yang Chin-long (楊金龍) said Wednesday that concerns over rising retail leverage in the stock market remain far from posing systemic risk, even as equities have surged this year. 

The Taipei stock market has climbed about 60% since the start of the year and hit 46,459 points on June 3 before entering a correction. Lawmakers have raised alarms about so-called “four loans” – mortgages, margin financing, personal credit loans, and car loans – being redirected into equities by retail investors, potentially threatening financial stability. 

Speaking at the Legislature’s Finance Committee, Yang said the current situation does not indicate systemic risk. He noted that while capital inflows into stocks have been rapid, regulators are closely monitoring developments. 

Addressing concerns cited in the central bank’s financial stability report about fast-growing financing in AI-related sectors, Yang said those references were based on International Monetary Fund (IMF) analysis, not the bank’s own assessment. 

Yang also described the recent market pullback as healthy. He said, “I think the recent downward correction is healthy. That is to say, it can't just go up without going down, but I personally think the recent correction is healthy.”

Foreign investors have been net sellers regardless of daily swings, prompting questions about capital outflows. Yang said such flows are typical given Taiwan’s high dividends, estimating net outflows of at least US$5 billion in June, which he said is not unusually large.