Stock prices fell by nearly 6 percent yesterday as cautious investors hesitated to buy shares because of a double blow from renewed political unrest and the unresolved economic crisis around the globe, which drove the US stock market down overnight.
The benchmark TAIEX index lost 284.14 points, or 5.71 percent, to reach 4,694.12 as investor confidence weakened after clashes occurred during a street rally arranged by the opposition Democratic Progressive Party (DPP) against the visit of Chen Yunlin (陳雲林), chairman of the Association for Relations Across the Taiwan Strait (ARATS).
“Investors don’t like uncertainty.... We will closely watch if any new developments or confrontations occur,” said Andrew Teng (鄧安瀾), an analyst with Taiwan International Securities Corp (金鼎證券).
“We are more concerned that it will become a regular approach for the DPP to address political issues in the future,” Teng said.
The DPP’s protest came ahead of a meeting between Chen and President Ma Ying-jeou (馬英九) yesterday in Taipei.
On Wednesday, DPP supporters staged a sit-in in front of the Grand Hotel in Taipei where Chen met former KMT chairman Lien Chan (連戰).
Turnover shrunk to NT$57.56 billion yesterday from NT$84.38 billion on Tuesday.
Bucking the broad downtrend, local airlines and marine transportation companies were out-performers yesterday as they are expected to benefit from the opening up of direct transportation.
Stock prices of Yang Ming Marine Transportation Corp (陽明海運) and the nation’s biggest airlines China Airlines Ltd (華航) and EVA Airways Corp (長榮航空) jumped 2.5 percent, 3.47 percent and 2.92 percent, respectively, as they are expected to save on fuel costs and increase revenues thanks to shorter travel distances.
Political factors could overshadow the local stock market in the short term, but the US market would wield a greater influence on the Taiwanese bourses, analysts said.
The Dow Jones Industrial Average plunged more than 5 percent on Wednesday.
“We believe the local stock market will still take its cue from the global markets, primarily Wall Street,” Kevin Chung (鐘國忠), Jih Sun Securities Investment Consulting Co (日盛投顧) said.
“The weak macro environment may continue to cap [the upside of] stock markets,” Chung said.
Blue chips such as China Steel Corp (中鋼) and Formosa Plastic Corp (台塑) should be good investment targets for bargain hunters as stock prices of these firms have fallen below their net values, Chung said.
The TAIEX index could seesaw between 4,500 and 5,100 in the following trading sessions, Chung said.
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
RESHAPING COMMERCE: Major industrialized economies accepted 15 percent duties on their products, while charges on items from Mexico, Canada and China are even bigger US President Donald Trump has unveiled a slew of new tariffs that boosted the average US rate on goods from across the world, forging ahead with his turbulent effort to reshape international commerce. The baseline rates for many trading partners remain unchanged at 10 percent from the duties Trump imposed in April, easing the worst fears of investors after the president had previously said they could double. Yet his move to raise tariffs on some Canadian goods to 35 percent threatens to inject fresh tensions into an already strained relationship, while nations such as Switzerland and New Zealand also saw increased
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