Taiwanese shares ended 2.43 percent lower yesterday, tracking weaker regional markets amid concerns over falling oil prices and a potential Greek exit from the eurozone.
Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) attributed the tumble of the TAIEX to psychological factors, especially following a plunge on Wall Street overnight.
“Taiwan’s exposure to Greece is limited,” Tseng told a press conference after the TAIEX fell 225.77 points to 9,048.34. “The substantial risk remains low, which means psychological factors are likely the major reason for the decline.”
Photo: CNA
Since net inflow from foreign portfolio investors totaled US$15.93 billion for the whole of last year and has not shown significant volatility yet, Tseng said the TAIEX might see a return to normal.
Foreign portfolio investors bought a net total of NT$397.69 billion (US$12.43 billion) worth of shares on the local bourse for the whole of last year, according to data provided by the commission.
Foreign institutional investors sold a net NT$18.07 billion in local shares on the main bourse yesterday, Taiwan Stock Exchange (TWSE) data showed.
The commission said that it is planning to propose new stimulus measures next month to ease stock trading rules in an effort to bolster slow trading volume, prompting speculation that the relaxation could include raising the daily stock trading limit to 10 percent.
Market turnover was NT$110.20 billion yesterday, compared with NT$80.75 billion on Monday, according to TWSE data.
“Judging from the expanded turnover, I think many investors panicked today, rushing to sell stock after a plunge on Wall Street and heavy losses in other regional markets,” Mega International Investment Services Corp (兆豐投顧) analyst Alex Huang (黃國偉) said.
“Large-cap stocks became major targets of the latest sell-off,” Huang said. “I think selling largely came from foreign institutional investors.”
Taiwan Semiconductor Manufacturing (台積電) shares fell 4.3 percent to NT$133.5, Hon Hai Precision Industry Co (鴻海精密) slid 3.1 percent to NT$84.5 and Largan Precision Co (大立光) ended 3.19 percent lower at NT$2,275.
Cathay Financial Holding Co (國泰金控) fell 3.13 percent to NT$44.95, while China Airlines Ltd (中華航空) rose 1.68 percent to close at NT$15.1.
“Further losses in the local bourse are possible as long as Wall Street remains volatile,” Huang said. “If there is any further downturn, the local index could fall below 9,000 points soon and make the market even technically weaker.”
Additional reporting by CNA
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