Stocks continue slide, but at slower rate

Stocks continued to drop yesterday as political unrest dragged on, but the decline was stemmed to 2.94 percent, compared to 6.68 percent the previous day, supported by news that President Chen Shui-bian (陳水扁) agreed in principle to a vote recount and by speculation on the intervention of the government, analysts said.

The TAIEX shed 187.03 points, or 2.9 percent, to 6,172.89, with a turnover of NT$249.14 billion, a four-year high, which spurred speculation that the government was defending the market with state-pension or labor-insurance funds.

On the local bourse, losers outnumbered risers 648 to 299, with 27 stocks unchanged.

Overseas investors yesterday shed a net of NT$19.45 billion, while domestic investment-trust investors and proprietary traders sold a net NT$20.05 billion, according to the Taiwan Stock Exchange.

The benchmark index pared its decline by robust gains in DRAM stocks. Powerchip Semiconductor Corp surged NT$1.9, or nearly 6.8 percent, to NT$30, while Nanya Technology Corp rose NT$1.6 to NT$28.2.

Steelmakers also rose, with the state-run China Steel Corp adding NT$1.8 to NT$33.5. Finance and insurance stocks that plunged before the election rebounded slightly and lost a mere 0.46 percent yesterday.

"I think the performance is good enough in view of the domestic and international climates," said George Wu (吳裕良), an analyst at Primasia Securities Co.

In addition to the disputed recount, slumps in major international markets caused by heightened terrorism in the Middle East made investors more wary about putting cash in the market, Wu said.

The proposed nationwide protest by the pan-blue camp on Saturday may also place more pressure on the market throughout the week, Wu said.

Evonne Chang (張雅雲), an analyst at JF Taiwan Ltd, said investors were tending to pick high-yield stocks with no political associations.

Investors last week stockpiled transportation or pan-blue stocks and dumped pan-green stocks with an assumption of a win by the pan-blue camp.

"This is a good time to do some bottom-fishing on these neutral stocks with good fundamentals," Chang suggested.

Local business groups on Monday urged the government to stabilize the market with the National Stabilization Fund. But Vice Minister of Finance Gordon Chen (陳樹), who is also the executive secretary of the fund, said last night that the Cabinet had no intention to activating the fund at this point.

"For now, there is no urgent need to activate the National Stabilization Fund judging by the performance of the market ... As the government has promised to deal with the election dispute, the political uncertainty will clear in the short term," Chang said.

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