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TAIEX sheds 21.52 points

“Leading domestic chipmakers have trimmed their growth forecast for the third quarter on falling demand from the US and other countries.” — Alex Huang, assistant vice president at Mega Securities Co

The TAIEX yesterday shed 21.52 points, or 0.31 percent, to close at 7,002.54 amid thin trading.

The fall followed concerns about a slowdown in the pace of expansion reported by high-tech industries in the third quarter and speculation that the government has considered reinstating a capital gains tax.

The benchmark index opened at 6,920.75, down 100 points from a day earlier and meandered low throughout most of the morning session before staging a U-shaped rebound at midday, the Taiwan Stock Exchange’s data showed.

Turnover posted a new annual-low of NT$70.867 billion (US$2.32 billion), compared to NT$92.571 billion the previous day.

sluggish

SinoPac Securities Co (永豐金證券) analyst Vincent Chen attributed the sluggish showing in part to investors’ concerns over a capital gains tax proposal.

The tax reform committee headed by Vice Premier Paul Chiu (邱正雄) agreed to overhaul the nation’s tax system on Thursday and to consider levying a capital gains tax, as some panelists said doing so was an effective means to pursue social justice.

Financial officials had shunned the proposal after the local bourse nosedived 3,187 points during the brief existence of the unpopular tax in 1989 after which finance minister Shirley Kuo (郭婉容) resigned to take the blame.

In yesterday’s trading, the stock market fluctuated between 7,008 and 6,903.85, before a rally near the end of the trading.

A total of 3.3 billion shares changed hands.

Minister of Finance Lee Sush-der (李述德), seeking to boost investor confidence, said there was no need to worry about capital gains tax as the possibility of it being restored is low.

market performance

Lee said he believed the market’s performance had more to do with the Dow Jones Industrial Average Index which fell 205.67 points, down 1.78 percent from the day before.

Alex Huang (黃國偉), assistant vice president at Mega Securities Co (兆豐證券) disagreed, saying it was mainly the bearish outlook offered by several high-tech companies that had dragged the market down yesterday.

Huang said the slower pace of expansion reported by leading domestic chipmakers had prompted investors to turn cautious about their investments in the equity market.

“Leading domestic chipmakers have trimmed their growth forecast for the third quarter on falling demand from the US and other countries,” Huang said in a telephone interview.

“The industry used to post two-digit growth, but the pace is expected to slow to a single digit,” he said.

Construction shares reported the biggest decline of 4.8 percent as investors remained pessimistic about the property market, both at home and abroad, he said.
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