The China Post news staff and CNA
Share prices in Taiwan retreated yesterday after rallying a day earlier as lingering concerns over the debt problems in the eurozone hurt sentiment, especially after Italian bond yields hit new highs overnight, dealers said. Though debt-ridden Italy and Greece have new governments, market confidence remained fragile as questions remained over how they would deal with their debt and whether they would implement austerity measures to improve their financial conditions, according to the dealers.
The weighted index closed down 34.59 points, or 0.45 percent, at 7,491.06, after moving between 7,475.33 and 7,528.78, on turnover of NT$71.61 billion. The market opened 3.18 points lower in a knee-jerk reaction to a pullback on Wall Street overnight and downward pressure increased as investors witnessed other regional markets, such as Hong Kong and Tokyo, suffer losses due to a jump in the Italian bond yields, dealers said.
While the index fell below the 7,500 point mark at the end of the session, turnover remained thin, indicating selling pressure was not severe, they said. Separately, Daiwa Securities yesterday forecasted that Taiwan stocks will undergo a correction after the January presidential election next year yet will go on an upward trend in the second half of the year. Daiwa Securities made the forecast prior to Morgan Stanley Capital International’s announcement of its latest weight adjustment scheduled for today. It is expected various election incentives will help lift the TAIEX prior to the Jan. 14 poll. However, according to Daiwa, after the poll, a return to normalcy will emerge in the market, where stocks will move based on their fundamentals. Given expectations that Taiwan-listed firms may still see earnings per share fall between 3 and 8 percent, Daiwa forecasted that the TAIEX may fall to 6,050 in the first half of 2012. Yet, with an overall recovery set to take place in 2013, Taiwan stocks are expected to go up in the second half of 2012 and reach a high of 8,700.