Asian stocks slumped, extending a global rout, as concern grew that Europe’s government debt crisis will spread beyond Greece and derail the global recovery.
In Taipei trading, shares fell for the seventh consecutive session with the TAIEX index dropping 233.87 points, or 2.95 percent, to close at 7,696.90.
Yesterday’s closing level was the lowest since March 16, when the TAIEX ended at 7,695.63, while the day’s fall was the largest since April 19, when the index declined 3.17 percent on news of fraud charges against Goldman Sachs.
All eight major stock categories on the bourse lost ground, with cement issues dropping the most at 3.9 percent, the Taiwan Stock Exchange’s data showed. Losers outnumbered gainers 2,955 to 442, with 70 remaining unchanged, according to the data.
“The fall was mainly due to market concerns over Greece’s escalating debt crisis and China’s efforts to curb rising property prices,” said Kuo Chien-cheng (郭建成), a fund manager at Taishin Investment Trust Co (台新投信).
Kuo said the economic fundamentals remained good in the second quarter and investors could wait and re-enter the market when stocks fall again.
William Dong (董成康), a managing director at UBS Securities, said in a report yesterday that the upside for the TAIEX would be limited in the near term, given the recent bearish sentiment.
However, he maintained the brokerage’s view that the benchmark index would reach 8,000 by the end of the year.
Minister of Finance Lee Sush-der (李述德), meanwhile, said the decision on whether or not to activate the state-owned National Stabilization Fund (國安基金) to stop the share sell-off was up to the fund’s steering committee. He declined to comment further.
The MSCI Asia Pacific, excluding the Japan Index, dropped 1.7 percent to 411.04 as of 6:26pm in Hong Kong yesterday. The gauge has climbed 9.2 percent from its low this year on Feb. 8, as better-than-estimated economic data and earnings around the world offset European debt concerns.
“Investors have clearly shifted their focus from strengthening corporate earnings and an improving macroeconomic backdrop to the problem of sovereign debt,” said Nader Naeimi, a strategist at AMP Capital Investors Ltd in Sydney.
Hong Kong’s Hang Seng Index slumped 2.10 percent, Australia’s S&P/ASX 200 Index sank 1.33 percent and China’s Shanghai Composite Index gained 0.77 percent.
Markets in Japan, South Korea and Thailand are closed for holidays.
On the foreign exchange market, the New Taiwan dollar dropped the most in three months on suspected central-bank intervention and the heaviest stock sales by foreigners in almost two years.
The NT dollar dropped 0.4 percent to close at NT$31.600 against its US counterpart after foreign institutional investors sold a net NT$23.71 billion (US$750 million) in Taiwanese shares yesterday, the most since June 2008.
“Some people are short-covering because the central bank said hot money will damage the economy,” said Tarsicio Tong, a foreign-exchange trader at the Union Bank of Taiwan (聯邦銀行).
The central bank has “signaled to the market” not to bet against the US dollar, he said.
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