Ongoing political turmoil continued to affect the stock market yesterday, shaving another 119.16 points, or 2.1 percent, off the TAIEX. The index finished the day at 5,425.02 on turnover of NT$41.5 billion.
Analysts say a recall motion against President Chen Shui-bian (
A strong performance in US markets on Tuesday, which often serve as a cue for local investors, failed to give stocks a boost. The technology-heavy NASDAQ index climbed 5.6 percent.
The National Stabilization Fund (
Foreign investors, on the other hand, aggressively bought electronics shares. Some 22,000 lots of Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Co (聯電) were bought.
On the political front, lawmakers have already mustered 142 votes in favor of the recall motion against President Chen, according to KMT legislators. At least 147 votes, or two-thirds of the 220 total votes in the Legislative Yuan, are required to recall the president.
"Whether the recall motion passes or not, once the motion is proposed the TAIEX will be negatively affected," said Henry Cheng (
"When KMT legislators propose the recall motion in the Legislative Yuan within the next few days, the TAIEX could fall further. If the recall motion passes, it will take six months before the next president is elected, and the uncertainty during this period would likely cause the TAIEX to drop hundreds of points since no investor would buy stocks under such conditions," Cheng said.
"Even if the motion fails, investor confidence will be damaged. In both cases, the 5,000 point level is unlikely to be maintained."
Meanwhile, more than 100 listed companies, about one-fifth of the TAIEX's total, are lowering their financial forecast for the year, mostly affected by the declining stock market, according to the Taiwan Stock Exchange.
Most of these companies are in the food and textile sectors, with others belonging to the electric, steel and construction sectors.
Nearly 20 companies within the electronics sector have lowered their financial forecasts for this year, executives from the exchange said. The exchange refused to disclose the names of the companies.
Analysts are pessimistic about the performance of the TAIEX for the remainder of this week.
"Before the recall motion is presented, hardly any buying interest is expected from local investors," Cheng said.
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