TAIEX falls as Madrid bombings renew fears

Shares ended lower yesterday, tracking overnight falls in US stocks on renewed fears of terrorism following the Madrid bomb attacks, analysts said.

Heavyweight electronics and financial stocks led the fall, as negative markets abroad further weakened already cautious local sentiment in the run-up to the presidential election, they said.

The TAIEX dropped 78.87, or 1.2 percent, to 6,800.24. For the week, the index fell 2.1 percent, its biggest slide since the five days to Nov. 21. TAIEX futures for March delivery shed 1.7 percent to 6,807.

Decliners outnumbered advancers 577 to 277 with 116 stocks unchanged in trading valued at NT$146.07 billion (US$4.36 billion).

"The extended weakness on Wall Street amid fears of terrorist attacks spurred a widespread sell-off on the local bourse early in the session," said Maggie Chien, a consultant at Capital Investment Management (群益投顧).

Construction stocks, on the other hand, attracted interest on hopes they will benefit from promotion efforts later this month, which is traditionally a peak period for developers to market their housing projects.

Bolstered by continued upward momentum in property-related shares, the key index will likely seek for firm support around 6,800 points ahead of the election, Chien said.

The construction sector rose 2.9 percent, buoyed by robust demand in the local property market.

"On top of improving fundamentals, property stocks also reflected a liquidity-driven rally," Chien said.

Kuoyang Construction Co (國揚建設) surged 6.9 percent to NT$13.9, while Hung Sheng Construction Ltd (宏盛建設) rose 6.9 percent to NT$24.8.

Shares of cement and steel makers also benefited from the recovery in the property market. Chien Tai Cement Co (建台水泥) rose 3.7 percent to NT$6.85, while Southeast Cement Corp (東南水泥) advanced 3.5 percent to NT$12.

In line with the general weakness on the main board, local technology stocks fell 0.2 percent overall, with shares of chipmakers leading the decline.

United Microelectronics Corp (聯電), the world's second-largest contract chipmaker, fell 2.5 percent to NT$31.7, while its larger rival Taiwan Semiconductor Manufacturing Co (台積電) dropped 2.4 percent to NT$62.

EVA Airways Corp (長榮) and other travel-related stocks fell as some investors worried the bombing may deter people from traveling. EVA Airways shed 2.1 percent to NT$18.50.

"Terrorists are attacking again," said Celine Chiang (江宜津), a fund manager at Polaris International Securities Investment Trust Co (寶來投信) in Taipei.

"The damage to investor confidence is greater than its actual impact on the economy," she said.