Bourse rebounds, but more tax uncertainty likely


CNA

TAIPEI — The local bourse staged a rebound yesterday from heavy losses seen a session earlier caused by fears that the government will impose a tax on stock income, dealers said.

However, uncertainty over the likely stock income tax is expected to continue to interrupt market movement until financial authorities determine whether the tax will be collected and how it will be levied, they said.

The weighted index closed up 60.34 points or 0.76 percent at the day’s high of 7,933.00, off an early low of 7,775.75, on turnover of NT$99.02 billion.

The market opened down 0.57 percent and extended losses to the day’s low on follow-through selling from a 2.05-percent plunge a day earlier after a taxation reform task force under the Ministry of Finance announced it would list the capital gains tax, primarily referring to a stock income tax, as the top agenda for future discussions, dealers said.

After the index fell below 7,800 points, however, bargain hunters became active to take advantage of the latest downward selling pressure, vaulting the index back into positive territory by the end of the session, they said.

“As the current quarter is coming to an end, many local institutional investors are tending to push up share prices in a bid to dress up their books,” Grand Cathay Securities analyst Mars Hsu said.

“After yesterday’s stock income tax shock, these institutional investors have turned calm to some extent and started bargain hunting,” Hsu said.

In individual stocks, Formosa Plastics rose 0.93 percent to close at NT$86.90, Taiwan Semiconductor Manufacturing Co. added 0.95 percent to end at NT$84.90, and E. Sun Financial Holding closed up 2.21 percent at NT$16.20.

Hsu said it seemed that the local bourse has already some technical support at around 7,800 points.

“But, it is unlikely for the bourse to jump over stiff technical resistance ahead of the crucial 8,000 points as uncertainty over a possible stock income tax remains in place,” Hsu said.

Hsu said investors had better keep a close eye on the U.S. March manufacturing activity rate and the jobless rate due next week, which could move the global financial markets.

At the end of the session, the plastics and chemical sector scored the highest gains among the eight largest sectors of the market, finishing up 1 percent. Construction, and machinery and electronics stocks rose 0.8 percent, financials added 0.7 percent, and textiles gained 0.6 percent.

Foodstuffs rose 0.5 percent, and paper and pulp stocks gained 0.3 percent, while the cement sector closed down 0.1 percent.