Lo­cal shares fall 1.9 per­cent to be­low the 8,100-point level

The China Post - - FRONT PAGE -

Tai­wan shares ex­tended their losses from a day ear­lier to fall be­low the 8,100- point mark Wed­nes­day amid lin­ger­ing con­cerns over eco­nomic fun­da­men­tals in Tai­wan and around the globe, deal­ers said.

Tai­wan shares closed down 155.38 points, or 1.9 per­cent, at 8,021.84 on turnover of NT$98.64 bil­lion (US$3.04 bil­lion).

Selling fo­cused on large cap stocks across the board, in par­tic­u­lar in the bell­wether elec­tron­ics sec­tor and the fi­nan­cial sec­tor, to place heavy down­ward pres­sure on the broader mar­ket, they said.

Shares in Tai­wan took a beat­ing, with the weighted in­dex even briefly fall­ing be­low the 8,000 mark, as in­vestors’ con­fi­dence in fu­ture mar­ket move­ment was eroded by con­cerns over eco­nomic fun­da­men­tals, deal­ers said.

The fi­nan­cial sec­tor led the down­turn amid fears that the weak­ness of the Chi­nese yuan will drag down the value of lo­cal fi­nan­cial in­sti­tu­tions’ yuan-de­nom­i­nated as­sets, while Tai­wanese sup­pli­ers to Ap­ple Inc. faced heavy losses to place down­ward pres­sure on the bell­wether elec­tron­ics sec­tor, they said.

The weighted in­dex on the Tai­wan Stock Ex­change closed down 155.38 points, or 1.9 per­cent, at 8,021.84, a new low in two years, af­ter mov­ing be­tween 7,987.57 and 8,182.81 on turnover of NT$98.64 bil­lion (US$3.04 bil­lion).

The mar­ket opened up 1.31 points and rose to the day’s high on a mild tech­ni­cal re­bound from a ses­sion ear­lier, but selling soon fol­lowed as large-cap stocks, in par­tic­u­lar in the fi­nan­cial and elec­tron­ics sec­tor, came un­der heavy pres­sure to send the weighted in­dex into a tail­spin, deal­ers said.

With no signs of any im­me­di­ate re­bound, the weak­ness of the broader mar­ket lasted into the end of the ses­sion as the sell-off in ma­jor fi­nan­cial and high-tech stocks con­tin­ued, they said.

Lack of Con­fi­dence in Econ­omy

“The sell-off re­flected a lack of con­fi­dence in the lo­cal econ­omy af­ter the gov­ern­ment down­graded its forecast of the coun­try’s 2015 gross do­mes­tic prod­uct (GDP) growth rate (last week),” Concord Se­cu­ri­ties an­a­lyst Kerry Huang said. The gov­ern­ment trimmed Tai­wan’s GDP growth to 1.56 per­cent from a pre­vi­ous es­ti­mate of a 3.28 per­cent, catch­ing the mar­ket off guard.

Huang said that what was even scarier was that Tai­wan’s GDP for the third quar­ter is ex­pected to grow only 0.1 per­cent from a year ear­lier, com­ing closer to zero growth, ac­cord­ing to the gov­ern­ment’s up­dated es­ti­mate.

“Eco­nomic con­cerns have sparked heavy selling in the lo­cal eq­uity mar­ket. Af­ter a re­cent heavy down­turn, many in­vestors have lost their faith so it was no sur­prise that they rushed to cash out of the stock mar­ket and run for the mo­ment.” Huang said.

The fi­nan­cial sub-in­dex closed down 2.88 per­cent. Among the los­ing fi­nan­cial stocks, Fubon Fi­nan­cial Hold­ing Co. (

) lost 2.53 per­cent to close at NT$50.10, Cathay Fi­nan­cial Hold­ing Co. ( ) fell 2.57 per­cent to end at NT$43.65, and SinoPac Fi­nan­cial Hold­ing Co. (

) shed 5.05 per­cent to close at NT$10.35.

“To my knowl­edge, many lo­cal fi­nan­cial in­sti­tu­tions have large ex­po­sures to China so a weak­en­ing yuan could cost them a lot. Even worse, volatil­ity in the China eq­uity mar­ket is ex­pected to hurt them fur­ther as they own a large chunk of Chi­nese se­cu­ri­ties,” Huang said.

Among the fall­ing “Ap­ple con­cept stocks”, smart­phone cam­era lens sup­plier Lar­gan Pre­ci­sion Co. ( ) fell 4.01 per­cent to close at NT$2,875.00, and me­tal casing maker Catcher Tech­nol­ogy Co. ( ) lost 1.73 per­cent to end at NT$340.00.

“It seemed to me that in­vestors do not have high hopes that the launch of the next iPhone mod­els, likely in Septem­ber, will boost these Ap­ple sup­pli­ers’ ship­ments,” Huang said, adding that some mar­ket an­a­lysts have even an­tic­i­pated that the up­com­ing iPhone mod­els will un­der­per­form their pre­de­ces­sors.

De­spite its down­turn, Tai­wan Semi­con­duc­tor Man­u­fac­tur­ing Co. (TSMC, ), the most heav­ily weighted stock in the lo­cal mar­ket, fell only 0.79 per­cent to close at NT$125.00, out­per­form­ing the en­tire elec­tron­ics sec­tor, which ended down 1.77 per­cent.

“I do not rule out the pos­si­bil­ity that gov­ern­ment-led funds bought into TSMC shares to­day in a bid to pre­vent the weighted in­dex from fall­ing fur­ther,” Huang said.

“The stock has been over­sold and be­come cheap. That’s why bar­gain hun­ters were will­ing to pick it up to­day,” he said.

Mar­ket Watch­ing for Gov’t

Stim­u­lus: An­a­lyst

“Af­ter the down­turn seen in re­cent ses­sions, mar­ket sen­ti­ment has been badly hurt,” Ta Ching Se­cu­ri­ties In­vest­ment Con­sult­ing an­a­lyst Eric Lai said.

“Right now, there aren’t many peo­ple who want to hold their stocks be­cause they’re wor­ried about fur­ther volatil­ity down the road.”

Since April 27, when the weighted in­dex hit its 2015 high, Tai­wan’s stock mar­ket had fallen about 1,800 points, or 18 per­cent, as of Tues­day.

Lai said many in­vestors are wor­ried about eco­nomic fun­da­men­tals at home and abroad and fear that slow­ing global de­mand will hurt Tai­wan’s ex­ports, which serve as the back­bone of the coun­try’s eco­nomic growth.

“Now the eq­uity mar­ket is watch­ing closely what the gov­ern­ment will come up with to stim­u­late the econ­omy,” Lai said.

The Ex­ec­u­tive Yuan is ex­pected to re­lease a short-term stim­u­lus plan later this week to in­ject life into the lo­cal econ­omy fol­low­ing the cut in the 2015 GDP growth forecast.

Lai said the Philadelphia Semi­con­duc­tor In­dex’s 2.08 per­cent plunge overnight also prompted in­vestors here to dump their high-tech hold­ings due to wor­ries that the elec­tron­ics sec­tor will feel the pinch of weak­en­ing global de­mand.

CNA

A man looks at the quo­ta­tion board at a bro­ker­age in Taipei, yesterday. Tai­wan shares ex­tended their losses from a day ear­lier to fall be­low the 8,100-point mark yesterday.

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