The stock market will reopen today after being shutdown following the attack by terrorists on the US, Minister of Finance Yen Ching-chang (
Yen said the 7 percent limit on rises and falls in individual stocks would remain unchanged as "investors have been given sufficient time to calm down and reflect on the situation [in the US]."
The stock market closed yesterday due to fears of panic following the attacks on New York's World Trade Center and the Pentagon in Washington.
PHOTO: GEORGE TSORNG, TAIPEI TIMES
Analysts say the near-term performance of the local stock market would likely follow the movement of major international stock markets, especially those in the US.
In an emergency meeting on Tuesday, the Cabinet decided not to activate the stabilization fund.
"The vice premier and chairman of the stabilization fund, Lai In-jaw (
With the TAIEX near 4,000, market participants expect the index to test that support level when it reopens.
Yen said the ministry has no idea of where the TAIEX should be.
"The TAIEX's level should be determined by market forces, which reflect the prospects of the economy and individual industries. The ministry, therefore, is unlikely to attempt to manipulate the share market," Yen said.
The finance minister noted that the decline of European and Asian stock markets yesterday ranged between 4 percent and 8.5 percent.
One market watcher said that a certain degree of panic-selling was unavoidable.
"The near-term psychological impact on the local stock market is unavoidable since Taiwan's economy strongly relies on the US market," said Chou Tien-chen (
"It's not easy to accurately evaluate the impact before the damage to US financial system is assessed."
Chou also said that it remains unclear whether the US would able to conduct routine trading. "When the US market begins to function normally, the impact on the local stock market will be reduced," he said.
"From a historical point of view, this event is a non-economic incident and will generally not influence stock performance," Chou added.
Another market watcher said the local market would mimic the performance of their international counterparts, especially the NASDAQ.
"The Taiwan stock market is likely to follow the performance of international markets in the near-term," said Neal Stovicek, an analyst of National Securities (建弘證券).
"Taiwan's high-tech stock index has been 70-percent correlated with the performance of the NASDAQ over the past year. The near-term performance of the NASDAQ will be important to watch," Stovicek said.
The central bank yesterday intervened in the foreign exchange market to keep a lid on the surge of the New Taiwan dollar in the wake of the devastating attacks on the US, dealers said.
The NT dollar closed yesterday at NT$34.599, compared to NT$34.684 on Tuesday.
"The currency opened sharply higher in early trade as investors and depositors scrambled to cut their US dollar positions in anticipation of a weaker greenback following the attacks," a dealer from a local bank said.
"But the central bank later stepped in and spent some US$200 million to shore up the US dollar in the last 15 minutes before closing," she said.
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