The TAIEX yesterday tumbled 2.77 percent to close below the psychologically significant 7,000-point level, as nervous investors dumped shares amid mounting fears of a further global economic downturn led by high Italian and Spanish bond yields and worse-than-expected economic data from the US and China.
The benchmark index fell 193.6 points to close at 6,806.43, its lowest level since Aug. 27, 2009, with share prices dropping the most among major Asian markets, in line with Wall Street and the main eurozone stock markets.
“The slide on the stock markets in the US and Europe [on Tuesday] diminished investors’ confidence in Taiwan’s stock market,” James Yeh (葉鴻儒), an analyst at JP Morgan Asset Management (摩根富林明投信), said in a press note.
Turnover contracted to NT$89.76 billion (US$2.95 billion) from NT$90.75 billion on Tuesday, Taiwan Stock Exchange (TWSE) data showed.
Foreign investors sold a net total of NT$10.57 billion in shares, further dragging down the New Taiwan dollar. The local currency dropped NT$0.086 to close at NT$30.395 against the US dollar yesterday, central bank data showed.
Shares in electronics, financial and traditional industries all dived, with the optronics sub-index outpacing the downtrend to close down 4.66 percent, TWSE data showed.
Shares in Taiwan’s two largest LCD panel makers, AU Optronics Corp (友達光電) and Chimei Innolux Corp (奇美電子), both fell to the maximum daily limit of 7 percent, to close at NT$12.75 and NT$12.15 respectively.
The financial sub-index also underperformed the benchmark index yesterday by sliding 3.46 percent, but the downtrend of shares in the nation’s two largest service providers by assets were relatively limited, with shares in Cathay Financial Holding Co (國泰金控) and Fubon Financial Holding Co (富邦金控) falling 2.93 percent and 1.62 percent to NT$29.8 and NT$30.3 respectively.
The electronics sub-index dropped 2.69 percent, with shares of HTC Corp (宏達電), the world’s No. 4 smartphone brand plummeting 5.83 percent to NT$565 yesterday.
Yeh said the external jitters caused by the US and the eurozone’s economies, as well as internal presidential election uncertainties, may further drag down investors’ confidence in the near future.
However, stocks leveraging domestic demand in the Chinese market may remain relatively resilient, as the global economic downturn would have a relatively limited impact on them, Yeh said.
Liu Kun-hsi (劉坤錫), president of Masterlink Securities Investment Advisory Corp (元富投顧), said historical experience showed that a benchmark index below 7,000 usually created a good buying point on the TAIEX.
However, a tight presidential election result on Jan. 14 next year would raise uncertainties on the stock market, Liu said, adding that this was also the main reason that the TAIEX had fallen further than other global markets recently.
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