Stocks see modest decline after gains tax bill passage

The China Post news staff and CNA

The China Post news staff and CNA–Taiwan stocks fell slightly yesterday, the first day after the passage of a stock capital gains tax, on further losses incurred by some firms in the Apple supply chain, dealers said. The weakness of these “Apple concept stocks” came after shares of the U.S. consumer electronics giant took a beating on Wall Street overnight after reporting the disappointing results for the quarter ending in June, they said.

The weighted index closed down 8.44 points, or 0.12 percent, at 6,970.69, after moving between 6,963.57 and 7,023.78, on turnover of NT$60.35 billion. Apple concept stocks, in particular Hon Hai Precision Industry, which churns out iPads and iPhones for the U.S. firm, suffered losses amid fears of weakening global demand due to lingering debt problems in the eurozone, dealers said. Investors Net Sell Two of the island’s institutional investors, namely foreign investors and securities firms, continued to stand on the sell side, net-selling NT$3.712 billion and NT$399 million, respectively. Asset management firms, meanwhile, net-bought NT$168 million. Together the three posted a total net sell of NT$3.943 billion. Separately, real estate brokers have already detected the capital gains tax’s negative impact on securities firms, many of which have been selling properties to get more cash. According to Wang Wei-hung, manager with Global Asset Management, the capital gains tax controversy, coupled with the European debt crisis, has put Taiwan’s stocks in a tailspin, with average daily trade volume falling to NT$71.25 billion in April, all the way from the NT$122.3 billion in February. The figure had even fallen to below NT$50 billion on some of the days, he said. Wang further pointed out in June, 39 securities firms posted profits while 45 posted losses. Altogether securities firms’ gains totaled NT$1.664 billion, 1.95 times the growth from NT$562 million back in May, Wang said. Yet he said of the NT$1.664 billion, NT$1.17 billion was from property sales by securities firms, whose total earnings from their main business were less than NT$500 million. “This indicates securities firms are suffering from a lull in the market,” he said. Wang cited several securities firms that have either sold or are planning to sell properties, whose total value may exceed NT$10 billion. Some of the properties are office buildings in prime areas. “It is expected the commercial property sector will be pretty busy in the near future,” he said.