Crumbling U.S. stocks hurt local market

By Nick Land, The China Post

Taiwan’s stock market retracted further from Friday’s peak yesterday, sliding 1.5 percent or 66.73 points to 4,404. Turnover also continued to fall, at NT$35.7 billion, down from Monday’s NT$40.7 billion.

Crumbling prices of U.S. high-tech stocks and drying-up of overseas equity inflows encouraged a continuation of Monday’s profit-taking. The market remained in negative territory throughout the session, even dropping through the 4,400 barrier at one stage, although bargain-hunting towards the close pulled it out of the day’s trough.

“The fall in U.S. stocks overnight, and especially the downgrade on Intel, rattled some investors here,” said one trader, adding that some players were banking gains whilst awaiting the government’s July export data announcement, due on Wednesday.

The foundry majors’ U.S. listings suffered overnight downward corrections, provoking falls on the Taiwan market. TSMC fell 2.9 percent to NT$66. UMC, which has been treated far less favorably throughout the cycle, was clipped brutally by 5.8 percent to NT$37.2.

Acer, which was slow to catch the up-wave last week, proved immune to the down-trend and rose 1.1 percent to NT$18.40.

Most tech stocks, and all other sectors in aggregate, took losses.

The “Big 3” commercial banks lost 0.7-1.3 percent.

Whilst short-term cyclical factors and vulnerability to U.S. data could count against the market over the next few days, dealers remained generally positive, saying that the underlying liquidity stimulus should work to prop up prices, with a new up-wave expected after the current correction.