Fears about the state of the global economy saw the TAIEX drop 135.74 points yesterday to close at 8,462.57, meaning the bourse closed the Year of Snake down 1.58 percent to reverse 15 years of rallies at the final session of the lunar year.
Concerns about whether the US Federal Reserve will continue tapering its quantitative easing program and about China’s slowing growth sank bourses across Asia yesterday, analysts said.
The Fed begins a two-day meeting in Washington today and is scheduled to announce tomorrow whether it will further scale back its stimulus measures.
Photo: CNA
“The sell-off that jolted Wall Street last Friday spread to Asia today,” MasterLink Securities Corp (元富證券) president Quincy Liu (劉坤錫) said by telephone.
All local sectors were affected by the bourse’s decline, with ceramic and glass shares tumbling the most at 3.11 percent, while electronics shares shrank 2.69 percent and semiconductor makers fell 2.34 percent, Taiwan Stock Exchange (TWSE) data showed.
Turnover was NT$99.158 billion (US$3.25 billion) in the session.
Altogether, the benchmark TAIEX gained 7.03 percent in the Year of Snake, while market capitalization increased 9.59 percent to NT$22.22 trillion in the lunar year, the exchange said in a statement.
The local bourse, which will be closed from today through Tuesday next week for the Lunar New Year holiday, might continue to take its cues from Wall Street when trading resumes on Wednesday next week, Liu said.
“If Wall Street weakens more than 7 percent during the holiday, the TAIEX may see an extended period of corrections that will take it to 8,300 or even 8,100,” Liu said.
The TAIEX has fared better on the first trading session of a new lunar year than in the final session of the previous year in 11 of the past 15 years, the TWSE said.
Foreign investors reduced their positions by a net NT$17.19 billion yesterday, as mutual funds dropped NT$664 million and proprietary dealers trimmed down by NT$1.95 billion, TWSE data showed.
The local market should also watch global fund movements as hot money is being pulled out of emerging markets across the world, softening those countries’ currencies, Allianz Global Investors Taiwan (德盛安聯投信) said.
While the New Taiwan dollar and the local bourse will not be spared corrections, their pace is likely to be relatively mild, thanks to improving economic fundamentals, the German fund house said.
Meanwhile, Taishin Investment Trust Co (台新投信) attributed the slump across global bourses to normal profit-taking and said investors will soon refocus their attention on improved corporate earnings.
Additional reporting by Reuters
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