Tue, Jul 14, 2009 - Page 12 News List

Shares decline over delay in cross-strait trade pact

AFP , TAIPEI

Share prices closed down 3.53 percent yesterday after the government said a bilateral trade agreement with China may not be signed this year, dealers said.

The TAIEX fell 239.04 points to 6,530.82 on turnover of NT$120.61 billion (US$3.64 billion).

The market opened up 0.37 percent but pressure followed and accelerated until the end of the session with China chips that have close business with China in focus, dealers said.

Mainland Affairs Council Chairwoman Lai Shin-yuan (賴幸媛) said over the weekend the trade pact may not be listed on the agenda of the fourth round of cross-strait talks scheduled for the second half of this year.

“After a recent strong showing, investors seized Lai’s comments as an excuse to sell,” Mega Securities (兆豐證券) analyst Alex Huang (黃國偉) said.

Before yesterday’s sell-off, the local bourse had risen almost 13 percent since the beginning of May.

“But, I do not think whether the agreement will be signed this year or next year will really matter when cross-strait ties are warming,” Huang said.

The financial sector suffered heavier selling on fears that the signing of a memorandum of understanding with China to facilitate banking exchanges will be delayed, dealers said.

Yuanta Financial (元大金) shed 6.89 percent to NT$20.95 and Mega Financial (兆豐金) fell 6.79 percent to NT$15.10.

Transport and tourism stocks were also hard hit as investors took advantage of recent significant gains, dealers said.

Huang said market sentiment would remain cautious before US firms on Wall Street will release quarterly results later this month.

“It will not be a good buying opportunity unless the index falls below the 6,400 points,” Huang said.

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