Taiwan shares continue decline

The China Post news staff

TAIPEI, Taiwan — Taiwan share prices closed 2.62 percent lower yesterday, lopping another 172.30 points to bring the weighted index down to 6,412.63 on turnover of NT$91.20 billion.

The index has a high volatility of 6,384.14 at the low point and a high of 6,603.10. Losers far outnumbered gainers by 1,681 to 339 with 243 sliding by their daily limits. The latest fall was attributed mainly to concerns about Taiwan’s economic growth, the continuously weakening international stock markets, especially in the United States. Despite the positive market development of lower oil prices, a retreat among U.S. high tech stocks overnight triggered the slide for bellwether electronics here, securities analysts said. The declining share prices on overseas markets and the sustained rise of the U.S. dollar prompted international investors to temporarily withdraw from the Taiwan market. Foreign investors unloaded NT$7.772 billion worth of shares than the value of shares they purchased while local securities consulting firms net-bought NT$1.087 billion.

The latest remarks by President Ma Ying-jeou to materialize his “633” economic targets — averaging 6 percent annual economic growth, raising per capita GDP to US$30,000, and cutting unemployment to under 3 percent — in 2016 were used by investors to pull up on the sideline. The massive sell-off was caused in part by the investors’ disappointment for the diminishing hope of a quick turnaround for the economy. The market was also badly affected by escalating margin calls with massive selling targeting domestic demand oriented stocks on fears that weak local consumption would hurt their bottom lines, dealers said. Stocks in the financial sector, including securities firms, were among the hardest-hit since the slide started from previous high of 9,309 points when Ma assumed presidency on May 20. This reflected the contagion spread from the severely battered financial shares in the U.S. induced by writedowns and the prolonged slump of the real estate business. Government officials still maintains strong confidence in the resilience of Taiwan’s economy, although they also showed no intention to use the national stabilization funds to help shore up the sagging stock market for the time being. The government has set certain strict criteria for sending public funds into the stock market. But the conditions for the government to intervene are not right, said officials at the Ministry of Finance. Chen Tain-jy, chairman of the Council for Economic Planning and Development, stressed that the economic fundamentals in Taiwan remain sound while the average price-earning ratio of stocks have become ever attractive.

Chang Ping-chao, chairman of the General Chamber of Commerce of the ROC, suggested that the government consider short-term measures like shaving the securities transaction tax rate to lure back investors and ignite an upturn. Some securities analysts said no one is sure when the share prices to start bottoming out. One of the more secure approaches is to closely monitor the performance of major international stock markets and patiently detect the rebounding economic indicators before moving into the market, they said.

The more optimistic ones said that Taiwan shares could reach the bottom at the period near Mid-Autumn Festival, which falls on Sept. 13 this year. At least the historic data has shown that Taiwan stock price index staged strong surge of more than 1,000 to 3,000 points in the past whenever the figure fell through the key level of around 6,550 points or the 10-year moving average.