The TAIEX declined slightly yesterday on the weak performance on Wall Street overnight, as well as the lingering domestic political turmoil, market watchers said, adding that the military coup in Thailand did not have an impact on the local market.
The TAIEX slid 4.1 points, or 0.06 percent, to close at 6,877.77 yesterday. Turnover was NT$72.678 billion (US$2.21 billion).
"The association between the local and Thai stock markets is not strong ? besides, the coup in Thailand seemed to be peaceful, without major conflict reported," said Dave Chou (周顯黎), an analyst at Yuanta Core Pacific Securities Corp (元大京華證券).
Since the Thai baht fell 1.2 percent to 37.70 against the US dollar yesterday, its sharpest fall since May, some investors feared foreign investors might flee Taiwan and other Asian markets.
But Chou shrugged off such concerns, saying investors are focusing more on upcoming corporate earnings reports.
Singapore-based UOB Investment Advisor (Taiwan) Ltd also said in a report released yesterday that the sound fundamentals of Asian countries should work to assure investment sentiment in the region.
The UOB Investment Advisor said the coup was a short-term bearish factor that would inevitably have a negative impact on Southeast Asian stock markets, but was unlikely to cause an economic chain reaction or financial crisis in the region. It cited the experience of the North Korean missile crisis this summer for its optimism.
Foreign investors would be more likely to shift their money within the region, which would make politically stable Singapore a major beneficiary, followed by Malaysia, the UOB Investment Advisor said.
According to Taiwan Stock Exchange's statistics, foreign institutional investors bought a net NT$909.04 million of Taiwanese shares yesterday.
The selling pressure, however, was from local investors, with domestic investment trust companies selling a net NT$636.92 million and domestic proprietary traders offloading a net NT$254.96 million.
As of yesterday, foreign investors have bought a net NT$67.95 billion from the local market this month, according to stock exchange.
The market's performance has demonstrated that the negative influence from the recent political protests has been blunted, even though opposition parties have said they might launch a second recall motion against President Chen Shui-bian (
Fundamentals are the key to determining the market, and the effect will soon be seen after public companies post their sales at the end of the month, Chou said.
As the traditional high season for technology and electronics companies is around the corner, the market is expected to experience an upturn soon, he said.
However, UOB Investment Advisor has warned investors of rising political risks in several countries, including Taiwan, Mexico, and Hungary, and suggested caution over the composition of investment portfolios.
It suggested investors avoid the Thai market for the rest of the year to allow the country's political situation to stabilize.
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