The China Post news staff
TAIPEI, Taiwan — The weighted share price index of the Taiwan Stock Exchange yesterday plunged 5.76 percent, or 318.26, points to close at the session’s low of 5,206.40, marking the biggest decline since January and the lowest close since July 4, 2003, according to market sources.
The plummet followed Wall Street’s overnight plunge with the Dow Jones Industries dropping more than 500 points, and went in line with the overwhelming plunges seen in major Asian stock markets.
All the eight major categories of shares suffered drops, with the financial sector posting the biggest decline of 6.7 percent. Cement shares also dropped 6.2 percent. Amid the bearish sentiment, turnover rose slightly from the previous session’s NT$59.3 billion to close at NT$66.764 billion.
Institutional investors continued to post over-selling positions for the 11th consecutive session yesterday, with the net sales of NT$10.09 billion, including NT$9.488 billion recorded by foreign institutional investors, NT$340 million by dealers, and NT$261 million by securities investment and trust firms.
The tumble came despite market speculations that the Cabinet would inject mass funds into the market.
Local media has reported that as concerns over the global credit crunch continue to grow, Taiwanese have transferred en masse about US$3.69 billion (NT$120 billion) from private financial institutions to state-run banks in the past month.
To calm investors, the Cabinet announced Tuesday to guarantee all bank savings. However, the government also said on the same day Taiwan’s exports saw a decline in September for the first time since February 2007 due to the global financial crisis and weakening decline in China.
But market insiders said central banks of many countries are taking drastic measures to bolster confidence of investors. If the central bank governors and finance ministers of the G-7 can jointly demonstrate their concerted efforts to tackle the global financial upheavals at the upcoming G-7 meeting in Washington, investor confidence in the stock market might be resumed, they noted.
The insiders said the local bourse is expected to fluctuate significantly in the short term, adding that whether the bourse can enjoy a new wave of major rebound in the fourth quarter of the year will hinge on whether the U.S. financial markets can turn stable. Mega International Investment Consultancy said that the domestic bourse is expected to trend downward through the second half of the month, but the government’s national stabilization fund and the purchase of treasury shares by listed firms will serve to slow down the downward movement trend of the bourse.
The firm expected the weighted share price index to find strong support at the level of 4,800 points to 5,200 points.