Debate fails to inspire stock market

The China Post news staff

The China Post news staff–The Taiwan stock market yesterday failed to be inspired by the performance of President Ma Ying-jeou in the first presidential debate held Saturday, as most institutional investors became conservative amid uncertainty over result of the upcoming presidential race set for Jan. 14, 2012, according to market sources.

The weighted share price index of the local bourse yesterday declined 42.6 points to close at 7,098.08, and turnover shrank to NT$58.22 billion, the lowest level of its kind since Feb. 24, 2009.

In a report released yesterday, Merrill Lynch Securities cited public opinion polls conducted in the wake of the Saturday presidential debate as indicating that voter support for either President Ma’s re-election bid or for the opposition Democratic Progressive Party’s (DPP’s) presidential candidate Tsai Ing-wen declined by 2 to 3 percentage points, while the support rate for the People First Party’s chairman and presidential candidate James Soong remained unchanged or picked up 5 percentage points. Although Ma still led Tsai by a margin of 7 percentage points, the ratio of “neutral” voters surged to 17-18 percent, indicating the chances are almost equally split for both the ruling KMT and the opposition DPP to win the 2012 presidential race, the report said.

Accordingly, affected by the trade-off situation and great political uncertainty, foreign institutional investors have been forced to turn conservative toward their investment in the local bourse, the report added.

In addition, after the presidential race winds up on Jan. 14, there will be only three trading days before the local bourse is closed on Jan. 18 for the Chinese New Year holidays, most foreign institutional investors would prefer to take a defensive approach in investing in the local stock market, the report continued.

But Merrill Lynch expected the government here to step in to bolster the performance of the local bourse from Christmas through the presidential election, so as to win support from local individual stock investors in the election.

Also yesterday, Minister Chen Yu-chang of the Cabinet-level Financial Supervisory Commission (FSC) reiterated his confidence in the future performance of the local bourse, given Taiwan’s robust economic fundamentals, at the Finance Committee meeting of the Legislative Yuan yesterday morning. Chen said that the FSC will closely monitor the fluctuations of the share prices, stressing that the local bourse will become more stable along with the stability of international stock markets.

He said the FSC will be responsible for stabilizing Taiwan’s financial markets and having the banking system provide local enterprises with sufficient financial backing to cushion the adverse impact of the lingering European debt crisis.