The TAIEX tumbled 5.6 percent to close at 7,853.13 yesterday as nervous investors dumped shares amid mounting fears over a global recession, Europe’s escalating debt crisis and the US jobs report, pushing the index to its worst single-day performance since the 2008 global financial crisis.
That made Taipei the worst performer in Asia yesterday, with the 464.14-point decline representing its steepest fall in a day since November 2008, Taiwan Stock Exchange (TWSE) data showed.
Trading was heavy with turnover hitting NT$161.87 billion (US$5.58 billion) as investors cut holdings, pushing the local currency to NT$29.025, its lowest closing level since April 20.
“The market is likely to remain volatile in the short term after major economic bellwethers at home and abroad headed down,” Jordan Chen (陳朝燈), chief investment officer at Schroder Investment Management Taiwan, said by telephone.
He added that the latest reports on unemployment and the purchasing managers index offered a bleak outlook for both the US and the eurozone.
“The global economic recovery has turned out slower and bumpier than expected, while the spread of [Europe’s] debt problem to Italy and Spain has deepened worries,” Chen said.
For the week, the index fell 9.15 percent, or 791.05 points, its biggest weekly drop since October 2008, according to exchange statistics.
Foreign investors sold a net NT$15.62 billion in local shares, while domestic investment trust companies and proprietary traders sold a net NT$268 million and NT$438.1 million respectively, data indicated.
Executive Yuan spokesman Philip Yang (楊永明) said the government had not called an impromptu meeting to address the market’s tumble, but it was paying close attention to the potential impact of changes in economic conditions abroad and at home on the market.
In response to a question by reporters, Premier Wu Den-yih (吳敦義) said the government would activate the National Stabilization Fund to maintain stability in the market “at the most appropriate time” and “in the most appropriate manner.”
The fund will enter the market to prop up share prices when the fund’s management committee thinks it is necessary, Wu said.
The premier said he could only express concerns over the matter, not tell the committee what it should do.
Analysts expect the market correction to last for a while given the absence of strong catalysts.
“Sentiment will remain weak unless the US economy shows signs of a stable recovery,” JPMorgan Asset Management vice president Tom Tien (田克杰) said.
The US Federal Reserve could introduce a third wave of quantitative easing, Tien said, after the US economy grew only 1.3 percent in the second quarter.
Blue-chip names led yesterday’s fall, with HTC Corp (宏達電), the world’s No. 5 smartphone brand, closing down 6.26 percent at NT$798, while Fubon Financial Holding Co (富邦金控), the nation’s most profitable financial service provider, tumbled 6.26 percent to NT$44.20.
Taiwan Semiconductor Manufacturing Co (台積電), the world’s top contract chipmaker, closed down 4.86 percent at NT$66.60.
Taishin Securities Investment Trust Co (台新投信) said technology shares would continue to weigh on the stock market until the end of the inventory destocking cycle.
“Investors had better adopt a cautious approach before uncertainties settle,” Taishin Investment analyst Doris Lee (李穗佳) said.