Share prices plunged more than 3 percent yesterday to close at a one-month low, matching the decline in Asia’s major stock markets as fraud charges against Goldman Sachs Group Inc and Iceland’s volcanic ash clouds raised new concern about a double dip in the European economy.
The TAIEX plummeted 257.35 points, or 3.17 percent, to end at 7854.22 points yesterday, the lowest level since March 25 when it hit 7838.1. Japan’s Nikkei tumbled 1.74 percent and South Korea’s KOSPI fell 1.68 percent yesterday.
“The correction came earlier than we thought. News of the Goldman Sachs fraud case and the volcanic ash triggered the sell-off,” said Andrew Teng (鄧安瀾), who tracks the Taiwanese stock market for Taiwan International Securities Corp (金鼎證券).
Goldman Sachs’ case has aggravated weakness of local shares because of inadequate catalysts for growth, Teng said.
“No direct impact is expected on local financial stocks, but investors are seeking safer investment targets at this moment,” Teng said.
Shares of the nation’s major financial service providers Cathay Financial Holding Co (國泰金控) and Fubon Financial Holding Co (富邦金) declined 4.46 percent and 3.77 percent to NT$51.40 and NT$37.05 respectively.
Taiwan International Securities forecast the TAIEX could drop to between 7,600 and 7,500 points this week.
Tech and telecom shares were on the defensive yesterday, Teng said. It appears that the volcanic clouds over Europe did not exact great impact on shipments from local electronic companies despite disrupting air traffic in Europe, he added.
The stock price of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world's top contract chipmaker, went down 0.63 percent to NT$62.6 while the nation's top telecom operator Chunghwa Telecom Co (中華電信) slid 0.65 percent to NT$61.5..
The decline in the local stock market, however, could provide good entry points for investors, Teng said. Electronic component suppliers such as DRAM maker Winbond Electronics Corp (華邦電) and passive component supplier Yageo Corp (國巨) looked appealing as they would benefit from supply constraints, Teng added..
Yesterday, turnover rose slightly to NT$139.45 billion (US$4.4 billion) from the previous trading day. Overseas fund managers sold a net NT$3.52 billion, up from NT$1.71 billion on Friday last week.
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