The TAIEX shed 1.22 percent yesterday with losses across the board as Europe’s debt crisis and the lackluster business outlook for major domestic technology firms weakened sentiment.
The TAIEX fell 105.42 points to 8,530.68 at the close of trade yesterday on a moderate turnover of NT$94.75 billion (US$3.27 billion). The local bourse has sapped 2.1 percent after Standard & Poor’s, an international credit ratings agency, downgraded Greek debt to “CCC,” the lowest-rated government debt in the world, a week ago.
Analysts expected the correction to last for a while after the global economic recovery became bumpy and major domestic technology firms adopted conservative views about the business outlook.
“Investor confidence will remain weak before the debt problem stabilizes and the US jobless rate shows concrete improvement,” said James Yeh (葉鴻儒), a vice president at J.P. Morgan Asset Management Taiwan.
Uncertainties at home and abroad prompted foreign players to cut holdings in local shares, selling a net NT$908 million, according to stock exchange statistics. Proprietary traders and mutual funds sold a net NT$1.46 billion and NT$169 million of shares respectively.
“Investors will stay on the sidelines until the noise settles,” Yeh said.
The sub-index of electronic shares, which makes up more than 50 percent of the total index, led the decline, dropping 1.33 percent, Taiwan Stock Exchange data showed.
Shares in Yageo Corp (國巨), the nation’s top provider of passive-component services, closed down by the daily 7 percent limit after the Financial Supervisory Commission (FSC) on Friday voiced reservations about its planned acquisition by a private equity fund and its intended delisting from the local bourse upon the deal’s completion.
Orion Investment Co (遨睿投資), a joint venture of US private equity fund Kohlberg Kravis Roberts & Co (KKR) and Yageo founder Pierre Chen (陳泰銘), has offered to buy a majority stake in Yageo for NT$46.78 billion, or NT$16.10 per share.
However, the commission questioned the appropriateness of delisting Yageo from the local bourse given the company’s weight in the technology sector and the likelihood that its capital would be weakened based on the buyer’s financing plan.
The FSC challenge cast a shadow over the buyout attempt and the Investment Commission is expected to reach a decision before the deadline on Friday.
Shares in Acer Inc (宏碁), the world’s No. 2 PC brand, dropped another 4.24 percent to NT$46.30 after the firm last week cut its tablet computer shipments target for this year by half to between 2.5 million and 3 million units amid stiff competition from Apple Inc and Asustek Computer Inc (華碩).
Sub-indices on financial and construction stocks closed down 1.0 percent and 1.04 percent as the recently instituted luxury tax continues to dampen property transactions and mortgage lending. The ongoing food safety crisis shrank biochemical and food sub--indices 2.53 percent and 0.47 percent respectively.
Bucking the trend, the tourism sub-index gained 0.9 percent, thanks to an expected influx of independent Chinese tourists, starting next week.
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