Daily fluctuation cap increase attracts little action on 1st day
The increase in daily fluctuation limit for shares in Taiwan failed to attract investors on its inception yesterday as the local market fell in range and volume following drops on Wall Street and major European markets.
Starting yesterday, the prices of shares listed in Taiwan’s equity market are allowed to rise or fall by as much as 10 percent in a day — up from 7 percent — but the weighted index on the Taiwan Stock Exchange closed down 75.38 at 9,625.69. The volume of shares traded yesterday was also lower than expected, with turnover totaling NT$91.24 billion.
In comparison, the weighted index closed at 9701.07 on Friday with an unusually high daily turnover of NT$140.391 billion.
The local market performed timidly despite the increased room for fluctuation because investors were more concerned by the weak global stock markets, said Vice Minister of Finance Wu Tang-chieh ( ).
Wu pointed out that the change from the 7 percent set 25 years ago was in line with global stock markets. He said that it will take time for the limit increase to show its effect, but he is confident that the new policy will be beneficial to Taiwan’s equity market in the long run.
Dealers quoted by the Central News Agency pointed out that negative news — such as the downward revision of the U.S first-quarter GDP data renewed worries over the global economic fundamentals, including the looming fear of a “Grexit” — have simply generated too much gravitational pull for local stock prices despite the new policy.
Over a dozen stocks saw their prices surge to the new daily limit yesterday, with textile manufacturers reporting the best performances, including Hong Yi Fiber ( ) closing at its daily price limit of NT$37.75, Tex-Ray ( ) at NT$14.5 and Li- Cheng Enterprise ( ) at NT$161.5.
Bellwether electronics stocks closed down 1.01 percent yesterday amid concerns over Taiwan Semiconductor Manufacturing Co.’s (TSMC, ) sales growth in the third quarter. The company, the most heavily weighted stock on the Taiwan Stock Exchange, dropped 0.68 percent to close at NT$145.00.
“The local bourse remained haunted by negative leads from overseas. Judging from the moderate turnover today, investors were not prompted by the bigger fluctuation limits to sell more shares during the session,” Marbo Securities Investment Consulting analyst Chang Chihcheng was quoted by the CNA as saying.
Two men hold their heads while looking at the stock prices board at a stock brokerage in Taipei, yesterday.