TAIEX falls to year's low

Stocks plunged yesterday amid news that three bombs had exploded in Athens and the movements of Chinese ships in the Taiwan Strait, analysts said.

As foreign and local stock investors rushed to liquidate their Taiwanese shares, the TAIEX closed down 333.92 points, or 5.4 percent, at 5.854.23, its lowest level so far this year.

On the local bourse, decliners outnumbered gainers 927 to 30, with 20 stocks unchanged. Three stocks closed limit-up, while 375 were limit-down.

"Despite of improving economic fundamentals, the local benchmark broke through the annual average-value level of 5,850 points on non-economic panics," Lawrence Chou (周德維), a deputy manager at the Union Securities Investment Trust Co (聯邦投信), said yesterday.

Aside from renewed fears of global terrorist attacks, factors that also rocked the TAIEX yesterday included worries over the 10-day election recount starting on May 10, margin-call selling pressures and China's plans to cool down its overheating economy, Chou added.

Dealers said both retail and institutional investors dumped shares yesterday amid a hectic tradinig. Turnover was NT$116.47 billion, up from NT$97.62 billion the previous day.

Overseas investors yesterday shed a net of NT$10.62 billion worth shares, while domestic investment-trust investors and proprietary traders sold a net NT$6.15 billion, the Taiwan Stock Exchange said.

Foreign investors on Friday sold a record net NT$23.8 billion of Taiwanese stocks as the TAIEX slid to its weakest point this year.

Expressing an optimistic view, Chou yesterday said that the benchmark index is near its bottom, leaving limited room for further dips today, and may quickly rebound to the 6,000-point level in the near term and further to the 6,600-point level in the midterm, since the turnover slightly shrank recently.

Other analysts are not so optimistic, warning investors of a possible collapse in domestic economic confidence by noting that "now is a good time to sell," according to Chinese-language media.

Urging investors to calm down, Finance Minister Lin Chuan (林全) yesterday told the legislative that the TAIEX's recent decline wasn't healthy and reasonable.

"Such plunges will prove to be irrational," Lin said.

He, therefore said that the government has no plan to activate the NT$100 billion National Stabilization Fund (國安基金) to stabilize the stock market.

Sectors fell across the bourse, led by flat-panel and chip stocks. Taiwan Semiconductor Manufacturing Co (台積電), which closed limit-down NT$4 at NT$55, United Microelectronics Corp (聯電) down by NT$1.8 at NT$28.4.

AU Optronics Corp (友達光電), the world's third-largest thin-film-transistor liquid-crystal-display panel maker, slid 6.6 percent to NT$64. Its smaller peers, Chi Mei Optoelectronics Corp (奇美電子), dropped 6.6 percent to NT$64, and Chunghwa Picture Tubes Ltd (華映) limit-down 6.7 percent at NT$20.1.