The TAIEX yesterday fell below the 9,000 mark to close down 1.05 percent at 8,911.71, weighed by the weakness in electronics and financial shares as Asia’s major markets fell amid concern over the European debt crisis.
Turnover contracted to NT$93.78 billion (US$3.25 billion) from NT$117.38 billion on Friday, according to Taiwan Stock Exchange (TWSE) data.
“The decline in the local bourse matched the US stock market’s tumble last Friday amid rising uncertainties over [the US’] economic recovery and Europe’s debt problems,” James Yeh (葉鴻儒), an analyst at JPMorgan Asset Management (摩根富林明投信), said in a research note to clients.
US stock markets fell on Friday, with the Dow Jones Industrial Average dropping 0.79 percent to 12,595.75 and the NASDAQ Composite Index plunging 1.21 percent to 2,028.43.
Foreign investors sold a net total of NT$6.57 billion in local stocks yesterday, dragging down the New Taiwan dollar, which fell NT$0.1 to close at NT$28.888 against the US dollar.
Electronics shares bore the brunt of the selling, dropping 1.26 percent. The share price of tech bellwether HTC Corp (宏達電), the world’s No. 5 smartphone brand, fell 3.33 percent to close at NT$1,160.
The financial sub-index slid 1 percent, TWSE data showed.
The NT dollar’s recent appreciation versus the greenback and a potential prolonged short supply of components following Japan’s massive earthquake and tsunami in March continued to affect investor sentiment toward electronics shares, Yeh said.
However, electronics stocks could rebound in the second half of the year, as a global economic recovery could drive up the prices of information technology equipment and benefit local companies, Yeh said.
Wang Tsung-chieh (王宗傑), a fund manager at HSBC Global Asset Management (匯豐中華投信), said downstream electronics companies could outperform because stronger year-on-year revenue growth due to a relatively low base last year could drive up investor confidence.
He also expected companies in traditional industries, such as tourism, retail and airlines, to outperform in the short term amid positive cross-strait developments.
Shares of China Airlines (華航) and EVA Airways (長榮航空), Taiwan’s top two carriers, bucked the downtrend and traded higher yesterday amid optimism that cross-strait flight services would be expanded to meet strong demand, dealers said.
A new round of flight negotiations started in Beijing yesterday, focusing on the possibility of an increase in the number of flights amid closer business ties and growing tourism exchanges between Taiwan and China.
China Airlines closed up 0.79 percent at NT$19.05, while EVA jumped 2.09 percent to close at NT$29.30.
ADDITIONAL REPORTING BY CNA