Local shares close higher
Local share prices closed up 0.76 percent yesterday after the government stepped in to help the market recover from early heavy losses amid concerns for the global economy, dealers said.
The weighted index rose 33.10 points at 4,399.97 on turnover of NT$71.99 billion (US$2.15 billion).
The market opened down 4.73 percent after another Wall Street dive overnight, but buying from government-controlled funds surfaced in late trade to lift the market, dealers said.
“The buying focused [on] market heavyweights, which have been the long-term favorites of the government funds,” Grand Cathay Securities (大華證券) analyst Mars Hsu said.
“The support showed the government’s strategy not to allow the market to fall below the psychological 4,000 point level. Otherwise market confidence would have collapsed,” Hsu said.
Hsu said the government buying had alleviated pressure faced by retail investors from margin calls because of recent steep declines.
“More important, foreign institutional investors may think twice before cutting their holdings after witnessing the government’s support,” he said.
However, Hsu said it was unlikely that the market would have an immediate breakthrough because the shadow cast by global financial woes was still looming large.
China Steel profit growth drops
China Steel Corp (中鋼), the nation’s largest maker, posted slower profit growth as a result of China’s cooling economic expansion.
Net income increased 3.9 percent to NT$12.6 billion in the three months ended Sept. 30, compared with a 16 percent gain in the second quarter, figures released by the Kaohsiung-based company showed.
A slowing economy in China slashed demand from carmakers and builders.
“The market peaked for China Steel in the second and third quarters, and the next quarters don’t look good,” Angela Chuang, analyst at Capital Securities Corp (群益證券) in Taipei, said before the earnings report.
“Companies in China are dumping steel stockpiles, hurting the global market,” said Chuang, who has a “neutral” rating on the stock.
China Steel rose 1.9 percent to NT$21 on the Taiwan Stock Exchange before the announcement. The stock has fallen 50 percent this year, compared with a 48 percent decline in the Taiex index.
Citibank predicts 4% GDP
The global economic slowdown is taking its toll on Taiwan, Citibank NA (花旗銀行) said yesterday, predicting GDP could slow to an estimated 4 percent this year and to 3.6 percent next year.
The bank’s chief economist, Cheng Chen-mount (鄭貞茂), yesterday said consumer spending, investments and exports would likely follow other emerging countries in Asia that are experiencing slowdowns.
Among Asian countries, South Korea and Indonesia may face bigger challenges after taking their liquidity and foreign debts into consideration, Cheng said.
The bank also said it believed the US had entered recession and that Britain would be hit hardest among economies in the eurozone.
NT dollar ends nine-day fall
The NT dollar strengthened yesterday, ending a nine-day decline, on speculation the central bank had intervened to stop the downward spiral.
The NT dollar rose by NT$0.059, or 0.2 percent, to trade at NT$33.438 against the greenback on turnover of US$1.69 billion.
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