TAIEX pulled down by sharp declines in steel, cement firms

Shares ended lower for a fifth straight session yesterday, weighed down by sharp declines in steel and cement stocks, analysts said.

The TAIEX closed down 132 points, or 2.2 percent, at 5,831.07. Decliners outnumbered advancers 567 to 126 and 110 stocks settled unchanged.

Turnover rose to NT$81.72 billion (US$2.41 billion) from NT$73.65 billion on Wednesday.

"Steep losses in raw material stocks triggered a panic sell-off on the main bourse, after the prices of some base metals tumbled overnight," said Maggie Chien, an investment consultant at Capital Investment Management (群益投顧).

The steel subindex tumbled 6.4 percent. China Steel Corp (中鋼), the main bourse's most traded stock yesterday, finished 6.2 percent lower at NT$34.80, while Chung Hung Steel (中鴻) slid 6.6 percent to NT$21.20. Yieh Phui Enterprise (燁輝) dropped 6.9 percent to NT$25.70.

Despite the steep falls, Rachel Lee, an analyst at SinoPac Securities, said the upbeat outlook for the steel industry should remain intact.

"The uptrend in the industry is expected to extend into the first half of next year due to strong demand worldwide," she said.

Cement shares were also among the main bourse's major decliners, with their subindex off 6.5 percent. Taiwan Cement Corp (台泥) fell by the daily maximum of 7 percent to NT$17.30, and Asia Cement Corp (亞泥) tumbled 6.9 percent to NT$21.50.

"It's highly possible there may be a correction in old-economy stocks near term," Chien said, "Foreign investors may start offloading their holdings in raw material stocks."