The TAIEX fell below the psychologically important 7,000-point mark yesterday, the first trading day of the new year, as investors continued to feel uncertain about the global economy and Taiwan’s presidential and legislative elections on Jan. 14.
The benchmark index plunged 1.69 percent, or 119.87 points, to close at 6,952.21, with turnover contracting to NT$48.86 billion (US$1.61 billion), from NT$59.33 billion on Friday last week, marking the lowest level since Jan. 20, 2009, Taiwan Stock Exchange (TWSE) data showed.
Foreign institutional players trimmed a net NT$1.32 billion in local shares yesterday, which saw the New Taiwan dollar close at NT$30.315 against the greenback, down NT$0.025 from Friday last week, data from the central bank showed.
The finance and insurance sub-index suffered the second-heaviest losses among the main bourse’s eight sectors, tumbling 2.96 percent yesterday, TWSE data showed.
The oil, gas and electricity sub-index registered the biggest loss by shedding 3.15 percent yesterday.
The shares of Cathay Financial Holding Co (國泰金控), the nation’s largest financial services provider, Fubon Financial Holding Co (富邦金控), the nation’s second-largest financial services provider, as well as two major state-run financial holding firms — Mega Financial Holding Co (兆豐金控) and First Financial Holding Co (第一金控) — all fell by more than 2 percent, TWSE data showed.
Taishin Securities Investment Advisory Co (台新投信) chairman Andy Wu (吳火生) attributed the falling stock market to continued investor jitters on the eurozone debt crisis and the upcoming elections.
Because the TAIEX’s last trading day will before the Lunar New Year holiday will be on Jan. 18, just four days after the elections, Wu said these uncertainties would most likely ensure investors remained conservative in their outlook and hold onto their shares through the holiday period.
“As a result, the trading volume on the local bourse could remain low for this month,” Wu said by telephone.
The TAIEX was unlikely to experience a sudden jump or decline in prices in the near term as a result of interventions by the state-run National Stabilization Fund (國安基金), Wu said.
However, speaking at a ceremony to mark the official opening of the Financial Ombudsman Institution, a body that will mediate future financial industry disputes, Financial Supervisory Commission Chairman Chen Yuh-chang (陳裕璋) stressed his confidence in the Taiwan stock market. Volatility on the stock market was nothing unusual, he said yesterday.
Willie Shih (石隆智), a fund manager at HSBC Global Asset Management (匯豐中華投信), said investors could probably focus more on large-cap industrial conglomerate stocks amid the current uncertainties, as most of those companies were relative competitive and had better liquidity.
As for financial stocks, which usually play an important role in helping to stabilize the stock market, their profitability could grow substantially this year, Shih said.
“The central bank’s reduced pace in hiking interest rates could act as a drag on the premiums of these financial institutions,” Shih said.
Yu Jui-ming (余睿明), chief investment officer of Prudential Financial Securities Investment Trust Enterprise Co (保德信投信) said turnover remained low yesterday, as many markets were still closed in Asia except Taiwan, South Korea and the Philippines.