Stocks pull back, may test 5,000

By Noah Weston, Special to The China Post

The TAIEX shed another 51.28 points yesterday, or 1 percent, to end at 5,071.76, as Wall Street continued to flounder. Volume eased slightly to NT$57.74 billion from NT$59.06 billion on Wednesday. “Many investors have been frightened by Wednesday’s heavy losses. Market confidence has been badly hurt,” said Sean Shih, an analyst with Concord Securities. The market plunged 3.6 percent on Wednesday on Wall Street weakness and fears of a languishing greenback. The local currency gained ground again yesterday, closing at a 13-month high of NT$33.600. “As an export-oriented economy, Taiwan heavily depends on global purchasing power. Now, uncertainty is running deeper,” said Shih. Also putting a drag on the market was a spate of margin calls. The balance in margin-backed share accounts was NT$219.12 billion on Thursday, down from NT$226.30 billion on Wednesday, but analysts believe that number needs to fall further before a recovery can be sustained. All major sectors were down, though electronics and financials were spared some of the punishment, moving down the least at 0.61 and 0.32 percent respectively. Taiwan Semiconductor Manufacturing (TSMC) took a breather after the slaughter on Wednesday, closing flat at NT$66.5, while rival United Microelectronics (UMC) was down slightly at NT$39.4. The market is expected to test the psychologically critical 5,000 barrier within the next few sessions.