Stock prices fell by nearly 6 percent yesterday as cautious investors hesitated to buy shares because of a double blow from renewed political unrest and the unresolved economic crisis around the globe, which drove the US stock market down overnight.
The benchmark TAIEX index lost 284.14 points, or 5.71 percent, to reach 4,694.12 as investor confidence weakened after clashes occurred during a street rally arranged by the opposition Democratic Progressive Party (DPP) against the visit of Chen Yunlin (陳雲林), chairman of the Association for Relations Across the Taiwan Strait (ARATS).
“Investors don’t like uncertainty.... We will closely watch if any new developments or confrontations occur,” said Andrew Teng (鄧安瀾), an analyst with Taiwan International Securities Corp (金鼎證券).
“We are more concerned that it will become a regular approach for the DPP to address political issues in the future,” Teng said.
The DPP’s protest came ahead of a meeting between Chen and President Ma Ying-jeou (馬英九) yesterday in Taipei.
On Wednesday, DPP supporters staged a sit-in in front of the Grand Hotel in Taipei where Chen met former KMT chairman Lien Chan (連戰).
Turnover shrunk to NT$57.56 billion yesterday from NT$84.38 billion on Tuesday.
Bucking the broad downtrend, local airlines and marine transportation companies were out-performers yesterday as they are expected to benefit from the opening up of direct transportation.
Stock prices of Yang Ming Marine Transportation Corp (陽明海運) and the nation’s biggest airlines China Airlines Ltd (華航) and EVA Airways Corp (長榮航空) jumped 2.5 percent, 3.47 percent and 2.92 percent, respectively, as they are expected to save on fuel costs and increase revenues thanks to shorter travel distances.
Political factors could overshadow the local stock market in the short term, but the US market would wield a greater influence on the Taiwanese bourses, analysts said.
The Dow Jones Industrial Average plunged more than 5 percent on Wednesday.
“We believe the local stock market will still take its cue from the global markets, primarily Wall Street,” Kevin Chung (鐘國忠), Jih Sun Securities Investment Consulting Co (日盛投顧) said.
“The weak macro environment may continue to cap [the upside of] stock markets,” Chung said.
Blue chips such as China Steel Corp (中鋼) and Formosa Plastic Corp (台塑) should be good investment targets for bargain hunters as stock prices of these firms have fallen below their net values, Chung said.
The TAIEX index could seesaw between 4,500 and 5,100 in the following trading sessions, Chung said.
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