Shares in Taiwan took another beating yesterday, falling more than 500 points on expanded turnover in reaction to a nearly 5 percent fall in the Dow Jones Industrial Average overnight, but the government said it does not plan to intervene using the National Financial Stabilization Fund.
With concerns that the US Federal Reserve could raise key interest rates faster than expected, investors rushed to dump large-cap stocks, especially electronics heavyweights, such as contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), market dealers said.
The market opened down 1.69 percent at 9am. Selling quickly escalated across the board, with the TAIEX soon falling below the nearest point of technical resistance at about 10,386 points, the 240-day moving average, they said.
Photo: Fang Pin-chao, Taipei Times
Renewed buying emerged late in the session to help the broader market rebound, although yesterday’s losses were still the largest since March 13, 2000, when the stock market fell 617.65 points, or 6.18 percent, tumble, dealers said.
The weighted index on the Taiwan Stock Exchange closed down 542.25 points, or 4.95 percent, at 10,404.00 on turnover of NT$240.88 billion (US$8.197 billion).
The turnover was the highest in a single session in nearly nine years and was far above the NT$130 billion turnover on Monday, when the TAIEX fell 1.62 percent.
The fund has no immediate plans to prop up share prices in the wake of heavy losses in the past two sessions, Vice Minister of Finance Su Jain-rong (蘇建榮) said yesterday.
Su, who is executive secretary of the stabilization fund, told reporters that the plunge, in particular the 4.95 percent drop yesterday, resulted from investors’ efforts to lock in their gains from recent sessions.
The losses on Taiwan’s equity market largely reflected the plunge on Wall Street, as investors at home and abroad have sensed the risk of high valuations after the recent strong showing on the global equity market, Su said.
The decline had nothing to do with systematic risks, as it did during the last financial crisis, since the global economy is still growing, he added.
The selling in equities at home and abroad is likely to be short-lived and the markets are expected to stabilize when share prices return to normal, Su said.
It is not necessary for the fund to intervene, he said, adding that there are no immediate plans for fund commissioners to meet and discuss stimulus measures.
KGI Securities (凱基證券) analyst Phil Chu said there is no indication that Taiwan’s stock market would stage a quick rebound.
“Dow futures continued to fall in after-hours trading, so it is possible that the US market will keep falling after it opens on Tuesday [yesterday]. If so, the local market is likely to suffer additional losses,” Chu said.
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