Taiwan’s benchmark stock index slumped the most since August last year and was the worst performer in the region yesterday, as the gauge’s drop below a key support level prompted traders to sell equities.
The TAIEX fell 2.6 percent to 8,609.86 yesterday, the biggest one-day drop since Aug. 25. Selling accelerated after the index fell below its 60-day moving average of 8,749.50, Capital Investment Trust Corp’s (群益投信) Robyn Hsu said.
The TAIEX fell as much as 8.1 percent when it closed below the 60-day average on May 5, data compiled by Bloomberg showed.
“There was some panic selling from noon,” said Hsu, who helps manage US$3 billion in Taipei.
The TAIEX slumped 5.9 percent this week, the most since May last year. The stock market resumed trading on Tuesday after the Lunar New Year holiday from Jan. 31 to Monday.
The gauge settled yesterday just above a 61.8 percent Fibonacci retracement level of 8,584.58 that’s based on the gauge’s high and low points in the past six months, according to data compiled by Bloomberg.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. A support level is an area where they anticipate buy orders to be clustered.
Fibonacci chart analysis attempts to identify points where advances or declines may gain momentum. The difference between high and low points is divided into stages using levels such as 23.6 percent, 38.2 percent and 61.8 percent.
In a separate development, Morgan Stanley Capital International (MSCI) has raised Taiwan’s weighting in two of its key indexes in its latest index review after downgrading its strength in previous reviews.
According to the index review announced in Geneva, Switzerland, on Thursday, MSCI raised Taiwan’s weighting in the MSCI Emerging Markets Free (EMF) Index by 0.08 percentage points to 12.17 percent and lifted the nation’s weighting in the MSCI Asia Pacific Index -(excluding -Japan) to 20.87 percent, up 0.13 percentage points.
The latest adjustments ended the slide in Taiwan’s weighting in the two previous MSCI EMF Index reviews and the five previous MSCI Asia Pacific Index (excluding Japan) reviews.
Meanwhile, MSCI added integrated circuit designer MStar Semiconductor Inc (晨星半導體) into the MSCI Emerging Markets Index, while MStar, touch-panel maker TPK Holding Co Ltd (宸鴻) and machinery component firm Hiwin Technologies Corp (上銀科技) have been included in the MSCI Global Standard Indexes.
The adjustments are scheduled to take effect after the bourse closes on Feb. 25.