The TAIEX yesterday tumbled 1.83 percent, or 155.1 points, to 8,307.04 on a light volume, as the extension of the “status quo” by the US Federal Reserve fueled unease across the world over the global economic outlook, analysts said.
Turnover shrank to NT$75.66 billion (US$2.3 billion), compared with NT$94.31 billion on Friday last week, even though the Financial Supervisory Commission lifted the ban on short-selling, Taiwan Stock Exchange data showed.
Global uncertainty deepened after the Fed left interest rates unchanged on Thursday last week due to concerns about the global slowdown and financial market turmoil, state-run Hua Nan Securities Co (華南永昌投顧) chairman David Chu (儲祥生) said by telephone.
Photo: Chen Chih-chu, Taipei Times
The Fed decision indicated that the US economy is not strong enough for rate increases, causing concerns that the US might also be affected by the slowdown as investors continued to speculate about the Feds future moves, Chu said.
“Uncertainty warrants caution, which in turn checks trading volume,” he said.
The TAIEX’s fall was in line with the Dow Jones Industrial Average, which closed down 1.74 percent at 16,384.79 on Friday last week.
Foreign investors trimmed their holdings in local shares by a net NT$10.96 billion, while mutual funds sold a net NT$600.1 million of shares, according to bourse statistics, affirming the cautious sentiment.
Volume is likely to remain modest in the short term, with the benchmark index consolidating between 8,300 and 8,500 due to a lack of positive developments on the horizon, Chu said.
The removal of the short-selling ban had a very limited impact because investors would be wary of going short with the National Stabilization Fund looking to shore up local shares, Marbo Securities Consultant Co (萬寶證券投顧) analyst Winson Wang (王榮旭) said.
“Short-selling is unlikely to turn profit these days,” Wang said.
However, deteriorating economic data at home is unfavorable for going long either, the analyst said.
Major technology companies have offered a conservative guidance about their third-quarter earnings, which might prove correct in light of the poor economic data, Wang said.
Export orders, an indicator of actual exports in one to three months, contracted 8.3 percent last month, the Ministry of Economic Affairs said yesterday, widening from a 5 percent decline in June.
Optical plays fell 3.54 percent, as AU Optronics Corp (友達光電) shares closed down 5.91 percent to NT$10.35 amid reports of job cuts.
Financial shares also underperformed with a 2.44 percent decline, stock exchange data showed.
Financial holding companies likely took a hit from the drastic depreciation of the yuan and global stock-market turmoil last month, Wang said.
An expected interest rate cut by the central bank on Thursday would add to their difficulties going forward, the analyst said.
Shares of Cathay Financial Holding Co (國泰金控), the nation’s largest financial services provider by assets, closed down 2.63 percent at NT$46.35.
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