Share prices plunged 5.10 percent to close at a nine-month low yesterday after China's latest remarks about cross-strait relations sparked heavy margin calls amid already weak sentiment, traders said.
China vowed yesterday to crush "at any cost" Taiwan's moves toward independence, saying the nation's leaders were playing with fire with their plan to change the Constitution.
The TAIEX closed down 294.36 points at 5,482.96, on turnover of NT$76.04 billion (US$2.26 billion).
Losers outnumbered winners 909 to 24, with 37 stocks unchanged. Five stocks closed limit-up and 334 were limit-down.
Urging investors to remain calm, Vice Premier Lin Hsin-i (
Lin, who also doubles as chairman of the steering committee for the National Stabilization Fund, said that the government hasn't reached any decision to activate the fund to prop up the stock market.
The Cabinet created the NT$500 billion fund in 1998 to buy shares in the event the stock market should tumble sharply on non-economic factors, such as military tensions with China or natural disasters.
China's lashing out at President Chen Shui-bian (
Late yesterday, the government announced its plan to summon committee members today to discuss whether to use the National Stabilization Fund to bolster the stock market.
Traders suspect other government funds, including the Postal Savings Fund and Labor Pension Fund were at play in the market supporting shares, but they were overwhelmed by sell orders.
Taiwan's "economic fundamentals haven't changed, this is just panic selling," said James Huang (
"China's strong statements ahead of our presidential inauguration on May 20 made a lot of people nervous," said Tu Jin-Lung (
Tu said continued net share sales by overseas investors also played a part in yesterday's steep decline.
The country's chip giants led the market's decline.
Taiwan Semiconductor Manufacturing Co closed down NT$3.50 at NT$51.50 and United Microelectronics Corp closed down NT$1.80 at NT$25.10. Both were limit down.
Among other losers, AU Optronics Corp fell NT$4.00 to NT$59.00, ProMOS plunged NT$1.20 to NT$16.10, Chi Mei Optoelectronics shed NT$4.50 to NT$61.00 and Powerchip Semiconductor lost NT$1.90 to NT$16.40. All were limit-down.
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