Thu, Oct 29, 2009 page11

• TAIEX falls over caution on outflow, China talks

  DOWNWARD CORRECTION Investors were not very happy about an apparent delay in talks with China that augur the inking of a memorandum of understanding

  • By Crystal Hsu / STAFF REPORTER
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  The local bourse tumbled 1.61 percent to 7,533.95 points yesterday as investors turned conservative after the stock market rallied by more than 60 percent this year and the exact date of a financial agreement with China remained elusive, analysts said.

  The benchmark TAIEX plunged 123.95 points on turnover of NT$111.19 billion (US$3.42 billion) on the back of a fall on Wall Street as the US currency rebounded, Taiwan stock exchange data showed.

  Eric Lai (賴建承), an analyst at Marbo Securities Consultant Co (萬寶證券投顧), said the greenback’s appreciation fueled concerns that share prices in Asian economies, including Taiwan, were overvalued and that funds may flow back to the US.

  “The downward correction is likely to persist, with the stock index adjusting to between 7,384 and 7,255,” Lai said by telephone.

  “The TAIEX is relatively stable compared with its counterparts in China and South Korea,” he said.

  Institutional buyers sold a net NT$12.83 billion in local shares, with foreign funds accounting for NT$10.93 billion, stock exchange figures said.

  Glass and ceramics stock suffered the steepest drop of 2.7 percent, followed by textile and fiber issues at 2.58 percent and optical shares at 2.46 percent, the data indicated.

  The market opened down 19.9 points and fluctuated between 7,533 and 7,675.15 during the session.

  The tumble accelerated after Financial Supervisory Commission Chairman Sean Chen told the legislature’s Finance Committee yesterday morning that the inking of a financial memorandum of understanding (MOU) with China would not take place next month as local media had speculated.

  The financial regulator said negotiations had entered the final stage, and that if things ran smoothly, the two sides may sign a pact no later than the New Year.

  Chen made the comment while taking questions from Chinese Nationalist Party (KMT) Legislator Lu Shiow-yen (盧秀燕) on the date of the planned MOU.

  The FSC chairman said he would not close the deal during the fourth round of cross-strait talks in central Taiwan in December.

  “It is better for bilateral financial supervisory organizations to handle the MOU,” whereas cross-strait talks would be conducted in a private capacity, Chen said.

  Chen also said the FSC would publish rules within a month that set fee ceilings on demand deposits. Currently, banks collect different amounts for assorted services.

  For instance, Chen said, banks may charge up to NT$50 for restoring personal identification numbers for access to ATMs or provide the service free under the plan.

  Susan Chang (張秀蓮), chairwoman of the Bankers Association of the Republic of China and the state-owned Bank of Taiwan (台灣銀行), expressed hope that the FSC would draw up principles only and allow banks to draw up fees in line with the market mechanism.

  “Uniform charges run against the spirit of the free market,” Chang said in a telephone interview. “It is better to require banks to make related information more transparent to their clients beforehand.”
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