Stock de­cline to ac­cel­er­ate, say an­a­lysts

The China Post - - LOCAL -

The heavy losses suf­fered by U.S. stock mar­kets last week are ex­pected to ac­cel­er­ate the fall on Tai­wan’s mar­kets, lo­cal an­a­lysts said yesterday.

The weighted in­dex of the Tai­wan Stock Ex­change ( TWSE) had shed 3.02 per­cent on Fri­day be­fore the U.S. stock mar­kets ex­pe­ri­enced one of their worst falls in re­cent years on the last day of their trad­ing week on grow­ing con­cerns about the health of the Chi­nese main­land’s econ­omy.

The Dow Jones In­dus­trial Av­er­age closed down 10.1 per­cent from its May record, reg­is­ter­ing its fourth con­sec­u­tive day of declines with a loss of 530.94 points, or 3.1 per­cent, to fin­ish at 16,459.75.

The S&P 500 and the Nas­daq Com­pos­ite In­dex both posted sharp declines of 3.19 per­cent and 3.52 per­cent re­spec­tively.

The dis­mal per­for­mances in the U.S. stock mar­ket are heap­ing ex­tra pres­sure on the TWSE, which has al­ready lost more than 2,000 points in re­cent weeks from its peak of the year at al­most 10,000 points.

Liu Kun-hsi, pres­i­dent of the Masterlink Se­cu­ri­ties In­vest­ment Ad­vi­sory Corp., said the weak­en­ing main­land Chi­nese econ­omy has al­ready re­sulted in re­duced or­ders for Tai­wan-based firms that rely on the Chi­nese mar­ket, the im­pact of which has been re­flected by the fall­ing prices on the lo­cal mar­kets.

The China woes have now ex­tended their im­pact to ma­jor stock mar­kets in the world, cre­at­ing more pres­sure on the lo­cal mar­kets, he said.

Chen Kuan-sheng, an an­a­lyst from the Caizi School, pre­dicts the U.S. stock mar­kets will con­tinue fall­ing and will fall to their low­est by the end of Au­gust. The Tai­wan stock mar­kets will do the same soon af­ter, he said.

He said some pos­si­ble de­vel­op­ments — such as merg­ers and ac­qui­si­tions, pro­posed re­vi­sions to the stock trans­ac­tion tax, and the de­pre­ci­a­tion of the New Tai- wan dol­lar — may pro­vide mo­men­tum for a re­bound.

Chip pack­ag­ing house Ad­vanced Semi­con­duc­tor En­gi­neer­ing on Fri­day an­nounced a bid to take over lo­cal com­peti­tor Sil­i­con­ware Pre­ci­sion In­dus­tries. An­a­lysts said it seems a good time for ac­qui­si­tions when stock prices are low.

Lee Chi-hsien, pres­i­dent of the over-the-counter GreTai Se­cu­ri­ties Mar­ket, also agreed that the lo­cal bourses will soon hit bot­tom. He at­trib­uted the re­cent declines to a lack of con­fi­dence, main­tain­ing that the fun­da­men­tals re­main sound.

Lee said the com­pa­nies trad­ing on GreTai gen­er­ally posted sig­nif­i­cant re­sults for the first half of the year. Although the growth mo­men­tum for them is slow­ing down, these firms still stand a chance of reg­is­ter­ing growth in the sec­ond half, he added.

Hsieh Chin- ho, chair­man of the Wealth Mag­a­zine, said Tai­wan is fac­ing one of its worstever eco­nomic dis­as­ters.

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