Fri, May 19, 2006 - Page 11 News List

Stocks tumble in wake of Wall Street's retreat

REGIONAL TREND A report that said the government's stabilization fund was ready to start unloading some of its NT$60 billion in shares added to the negative sentiment


Shares dropped 1.17 percent yesterday, hurt by weakness on both Wall Street and bourses across Asia, due to worries about possible US interest-rate increases. But the market managed at least to hold the key 7,000 point level, dealers said.

They said asset-backed stocks provided some support, attracting mild interest in companies with major holdings in real estate.

However, the local bourse was further weighed down by a report that the government's National Stabilization Fund would start off-loading its NT$60 billion (US$1.89 billion) worth of shares bought previously to help support the market.

The TAIEX lost 82.80 points at 7,034.03, on turnover of NT$114.12 billion.

Decliners led gainers 531 to 302, with 80 stocks unchanged.

"Wall Street's retreat dealt a blow to Taipei stocks and the report regarding the National Stabilization Fund produced a [negative] psychological effect," said Jack Tam, assistant vice president with Yuanta Core Pacific Capital Management Co (元大京華投顧).

Overnight, the Dow Jones Industrial Average fell 1.88 percent -- its largest one-day decline in three years -- to 11,205.61 after stronger-than-expected US consumer price data increased expectations of more rate hikes from the US Federal Reserve.

US consumer prices, excluding food and energy, rose 0.3 percent last month, higher than market expectations for a 0.2 percent increase.

Asian markets followed Wall Street's plunge, with Japan's Nikkei 225 Stock Average falling 1.4 percent to 16,087.18 points and Hong Kong's Hang Seng Index dropping 2.10 percent to 16,266.52 points.

The Singapore's Straits Times Index ended down 1.8 percent at 2,502.18 points, South Korea's KOSPI index lost 2.6 percent to 1,365.15 points, and Australia's S&P/ASX 200 index was down 1.88 percent at 5,119.3 points.

"We will probably see more bargain-hunting when and if the index falls below 7,000 points," due to prospects of growth for company earnings and expectations of foreign investor support for large-cap stocks, Yuanta Core Pacific's Tam said.

Barits International Investment Service (倍利投顧) analyst Stanley Chou said declines in technology heavyweights weighed on the main board, with signs of selling from foreign institutional investors.

Taiwan Semiconductor Manu-facturing Co (TSMC, 台積電), the world's largest contract chipmaker by revenue, fell 1.9 percent to NT$62.5. Rival United Microelectronics Corp (聯電), dropped 2.4 percent to NT$20.6.

AU Optronics Corp (友達光電), the world's third-largest liquid-crystal-display (LCD) panel maker by revenue, fell 1.3 percent to NT$52.1, extending a 1.3 percent decline on Wednesday.

Analysts said falls in LCD stocks reflect growing concerns about flat-panel prices dropping further in the next few quarters.

Cathay Financial Holding Co (國泰金控), Taiwan's largest financial group by assets, fell 1.4 percent at NT$71 and Chinatrust Financial Holding Co (中信金控) dropped 3.6 percent to NT$25.7.

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