Inconsistency on financial reforms by President Chen Shui-bian's (
"People are beginning to realize this may not be a credible president," said Rex Lin, a market analyst at ING Financial Securities in Taipei.
Although Premier Yu Shyi-kun failed to follow through on rumors of his imminent resignation yesterday, the decision for him to stay on may demonstrate that the government is running out of people willing to work for them.
"I don't think Yu really wants to do this ... he is just looking after his boss' interests," Lin said.
Last Friday, bleary-eyed Minister of Finance Lee Yung-san (
The offer came after over 100,000 farmers and fishermen demonstrate in Taipei yesterday, demanding the government stop all plans to reform their associations' credit departments.
In August, the government imposed tough restrictions on the grassroots financial institutions, limiting the amount of money that they could lend, in a move to force a reduction in non-performing loans (NPLs).
NPLs at farmers' and fishermen's credit units totalled NT$137 billion, or 21.53 percent of all loans on average, as of June this year.
The Chen administration's failure to follow through on reforms in the banking sector may undermine investor sentiment.
"Many investors originally applauded the government's financial restructuring plans, and then were disappointed when the government made a U-turn," said Alex Wu (
The inconsistent policies are added to the fact that "Most foreign investors are losing interest in the Taiwan market," Lin said.
Farmers demonstrating in Taipei had more than financial reform on their minds.
"Prices on agricultural produce have declined tremendously over the last two weeks," said an analyst at a local securities company who preferred not to be named.
Analysts, meanwhile, said uncertainty surrounding the pending Cabinet reshuffle and future financial reforms will have a limited impact on the stock market.
"I don't think Monday's market will necessarily react too much ... last week's events pretty much told the whole story," Lin said.
After efforts to toughen financial reforms provoked enormous opposition from grassroots institutions over the last few weeks, the Cabinet backed down on a Nov. 17 plan to suspend the initiative. Over the following four days the TAIEX declined from 4,813.53 to 4,579.45.
The TAIEX rebounded 2.8 percent on Friday to close at 4,707.61 on strong growth in the US stock market.
"Saturday's farmers rally was peaceful and there were no resignations announced on Sunday," Wu said.
"There should be no significant change in share markets on Monday. This is not the first time the Cabinet has made some adjustments ... the public, to some degree, has gotten used to government uncertainty," Wu said.
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