The benchmark TAIEX yesterday declined for the third consecutive day as investors worried about the lingering impact of financial difficulties at two US mortgage companies and a slump in the domestic real-estate sector.
Margin calls and loss-stop selling continued to weigh heavily on the local bourse. In Taipei trading yesterday, the benchmark TAIEX fell by 123.6 points, or 1.8 percent, to close at 6,710.64 — the lowest since Sept 15, 2006.
Turnover was NT$100.546 billion (US$3.3 billion), down from NT$107.517 billion the previous day, the Taiwan Stock Exchange’s tallies showed.
SLUMP
“The TAIEX, hurt by the global stock market slump, may continue its downward trend and soon challenge its 10-year moving average of 6,425 points, although it is also nearing its bottom,” Samson Cheuh (闕山雄), assistant vice president of Yuanta Capital Management Co (元大投顧), said yesterday by telephone.
Investor confidence took a nosedive as concerns spread about the health of Fannie Mae and Freddie Mac, triggering a negative ripple effect that hit local financial shares and caused a sell-off of shares of local insurance companies in particular.
The finance and insurance sub-index saw a decline of 1.93 percent to close at 831.14 points yesterday. The building material and construction sub-index, which reflects the general share performance in the real estate sector, was hit hardest, falling 5.15 percent for the day.
Margin calls reached NT$4.61 billion yesterday, compared with NT$5.14 billion on Tuesday, the stock exchange said.
The TAIEX has plunged 7.38 percent over the past three days. The Financial Supervisory Commission said yesterday it would respect “market mechanisms’’ if transactions were “rational,’’ but that it would investigate any suspected attempts to manipulate the local stock market, CNA reported, citing commission Chairman Gordon Chen (陳樹).
BOTTOM-FISH
A manager at ING Securities Investment Trust (Taiwan) Ltd, who declined to be named, said that it may be a good time to bottom-fish for blue-chip stocks.
But whether the TAIEX begins recovering soon will depend on the performance of global markets, which are being hit by soaring crude oil prices, the US subprime crisis and uncertainty ahead of corporate financial reports for the first half of this year, she said.
A survey of regional investors’ confidence conducted by ING and released on Tuesday found that Taiwan was the only market in Asia where investment confidence had improved in the first two quarters of this year.
In the third quarter, however, investors may lose their optimism because of the economic situation, the ING manager said.
“Judging from the TAIEX’s recent performance and as a short-term view, it may be difficult for [Taiwan’s investment sentiment] index to continue to climb,” she said.
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