Mon, Nov 16, 2015 - Page 13 News List

Paris attacks likely to weigh on TAIEX

WATCHING CLOSELY:Officials do not expect the attacks to have lasting effects on the local bourse, saying they would closely monitor the market, but not interfere with it

By Crystal Hsu  /  Staff reporter

The TAIEX is likely to weaken further today as the terrorist attacks in Paris on Friday might unnerve investors, even though government officials tried to play down the tragedy as an isolated incident.

Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) said the attacks probably would not have repercussions on global financial markets like the Sept. 11, 2001 attacks that caused Wall Street to slump after a four-day suspension.

“The commission would monitor the local bourse, but would not introduce special measures, because doing so would send the exact opposite message,” Tseng said.

The attacks on Paris are unfortunate, but there is no need to panic given that the impact on global economic activity might be limited, Tseng said.

The main trading index dropped below the quarterly average to 8,329.5 on Friday after lawmakers failed to act on plans to lower or scrap the capital gains tax on stock investments.

Global funds are pulling out in search of higher returns elsewhere on expectations that the US Federal Reserve is to raise interest rates next month, analysts said, adding that the nation’s poor economic performance is accelerating the flight.

The terrorist attacks are bound to deepen the feelings of unease, unfavorable for local shares, state-run Hua Nan Securities Co (華南永昌投顧) chairman David Chu (儲祥生) said.

Small and open, the local bourse is vulnerable to continued corrections in US and European shares that have yet to assimilate the attacks on Friday night, Chu said.

Foreign funds, in particular, would seek safe haven in advanced markets and slash local equities further to reflect Wall Street’s 1.16 percent fall and the tragedy, Chu said.

The TAIEX might next test the 8,200 resistance while the National Stabilization Fund watches from the sidelines, Chu said.

“The government would like to save its strength in the run-up to the presidential elections in January,” Chu said on the phone.

In the meantime, the local currency might soften to trade below the NT$33 level against the greenback seen early last month, after losing 0.54 percent last week, analysts said.

The downward adjustments of TAIEX’s weighting in three indices compiled by MSCI Inc supporting the depreciation, analysts said.

Turnover is likely to remain small as investors prefer to stay out for the time being, Marbo Securities Consultant Co (萬寶證券投顧) analyst Winson Wang (王榮旭) said.

“The Paris attacks might have a short-term impact though it is too early to pass judgment now,” Wang said by telephone.

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