Concerns that capital gains taxes will be assessed on stock investments sent Taiwan’s stock market into a tailspin yesterday and pushed the benchmark index below the 7,800-point mark by the end of the trading session, dealers said.
Market sentiment was also dampened by 10 percent hikes in domestic fuel prices that took effect on Monday, with many investors fearing the higher fuel costs would hurt the economy, they said.
The TAIEX has fallen 3.5 percent in the past four trading days since the issue of a possible capital gains tax emerged, making the benchmark gauge the worst performer in Asia in that period. The index closed down 102.05 points, or 1.30 percent, at 7,760.85 yesterday, the lowest close since Feb. 7. It gained 9.7 percent this year.
“Look at the expanded turnover. Selling was heavy and that dragged the index below 7,800 points,” Mega Securities analyst Alex Huang said. “The market has become technically unstable and weak.”
Fears rose after Minister of Finance Christina Liu (劉憶如) pledged on Monday at a Legislative Yuan hearing to send a capital gains tax proposal within one month to the Executive Yuan for approval.
Taiwan Stock Exchange chairman Schive Chi (薛琦) said in an interview in Boao, China, yesterday that there was a “99 percent” chance Taiwan would impose a capital gains tax on share transactions.
“It is very likely that the government will impose a capital gains tax eventually. But how the tax will be collected has become a major concern to many investors, in particular to institutional investors who hold massive portfolios,” Huang said. “Such uncertainty has hurt market confidence a lot and prompted many investors to cut their holdings now to avoid further losses caused by the tax.”
In addition, fuel price hikes and an expected increase in electricity rates are expected to adversely affect the economy, in particular in the second half of this year, Huang said.
“Investors should keep a close eye on the world’s economic fundamentals, which will serve as one of the key factors behind the local economy’s performance in the future,” he said.
By the end of the session, the construction sector had suffered the heaviest losses of any of the market’s eight largest sectors, finishing down 2.5 percent. Machinery and electronics shares, and paper and pulp stocks fell 1.7 percent, while textiles shed 1.5 percent.
Financial stocks fell 0.8 percent, food stocks shed 0.7 percent, plastics and chemical shares lost 0.6 percent and the cement sector closed down 0.1 percent.
Additional reporting by Bloomberg
Beijing’s continued provocations in the Taiwan Strait reveal its intention to unilaterally change the “status quo” in the area, the US Department of State said on Saturday, calling for a peaceful resolution to cross-strait issues. The Coast Guard Administration (CGA) reported that four China Coast Guard patrol vessels entered restricted and prohibited waters near Kinmen County on Friday and again on Saturday. A State Department spokesperson said that Washington was aware of the incidents, and urged all parties to exercise restraint and refrain from unilaterally changing the “status quo.” “Maintaining peace and stability across the Taiwan Strait is in line with our [the
EXTENDED RANGE: Hsiung Sheng missiles, 100 of which might be deployed by the end of the year, could reach Chinese command posts and airport runways, a source said A NT$16.9 billion (US$534.93 million) project to upgrade the military’s missile defense systems would be completed this year, allowing the deployment of at least 100 long-range Hsiung Sheng missiles and providing more deterrence against China, military sources said on Saturday. Hsiung Sheng missiles are an extended-range version of the Hsiung Feng IIE (HF-2E) surface-to-surface cruise missile, and are believed to have a range of up to 1,200km, which would allow them to hit targets well inside China. They went into mass production in 2022, the sources said. The project is part of a special budget for the Ministry of National Defense aimed at
READY TO WORK: Taiwan is eager to cooperate and is hopeful that like-minded states will continue to advocate for its inclusion in regional organizations, Lai said Maintaining the “status quo” in the Taiwan Strait, and peace and stability in the Indo-Pacific region must be a top priority, president-elect William Lai (賴清德) said yesterday after meeting with a delegation of US academics. Leaders of the G7, US President Joe Biden and other international heads of state have voiced concerns about the situation in the Strait, as stability in the region is necessary for a safe, peaceful and prosperous world, Lai said. The vice president, who is to be inaugurated in May, welcomed the delegation and thanked them for their support for Taiwan and issues concerning the Strait. The international community
COOPERATION: Two crewmembers from a Chinese fishing boat that sank off Kinmen were rescued, two were found dead and another two were still missing at press time The Coast Guard Administration (CGA) was yesterday working with Chinese rescuers to find two missing crewmembers from a Chinese fishing boat that sank southwest of Kinmen County yesterday, killing two crew. The joint operation managed to rescue two of the boat’s six crewmembers, but two were already dead when they were pulled from the water, the agency said in a statement. Rescuers are still searching for two others from the Min Long Yu 61222, a boat registered in China’s Fujian Province that capsized and sank 1.03 nautical miles (1.9km) southwest of Dongding Island (東碇), it added. CGA Director-General Chou Mei-wu (周美伍) told a