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Local bourse ends below 9,000 points on Wall Street plunge

Local bourse ends below 9,000 points on Wall Street plunge

Taipei, Oct. 8 (CNA) The Taiwan stock exchange's benchmark index closed below the 9,000-point mark Wednesday, led by the bellwether electronics sector, after Wall Street plunged overnight, dealers said. Despite the announcement of measures to boost margin trading and short selling, turnover was relatively low as cautious investors limited their trades ahead of the third-quarter earnings season in both Taiwan and the United States, they said. The weighted index on the Taiwan Stock Exchange ended down 85.63 points, or 0.94 percent, at the day's low of 8,955.18, off an early high of 9,038.61, on turnover of NT$69.38 billion (US$2.28 billion). The market opened down 0.56 percent in the wake of a 1.6 percent dive in the Dow Jones Industrial Average overnight after the International Monetary Fund lowered its forecast for global economic growth in 2015 to 3.8 percent from 4 percent previously, dealers said. The plunge on Wall Street also reflected fears over a rate hike cycle the U.S. Federal Reserve is expected to begin in mid-2015, and that downbeat sentiment spread to other equity markets, including Taiwan's, they said. Selling across several sectors escalated late in the trading session to pull down the index to below 9,000 points at the close, dealers said. "The losses on Wall Street were heavy, and that's why the government's stimulus measures failed to prop up market confidence," Mega International Investment Services Corp. analyst Alex Huang said. The Financial Supervisory Commission, Taiwan's financial regulator, announced Tuesday that it will relax credit restrictions on margin trading and short selling on the main board and the over-the-counter market. Among the new measures, the cap on borrowing for margin trading or short selling of a single stock on the TWSE will be raised to NT$30 million from the current NT$15 million and NT$10 million, respectively. The new rules will take effect on Nov. 10. "As market sentiment remained fragile after a recent sell-off by foreign institutional investors, many investors preferred to stay sidelined for the time being. I don't expect that many of them are willing to conduct more leveraged trades for the moment," Huang said. Huang said Wednesday's selling focused on high-tech blue chips again amid fears that foreign institutional investors will continue to cut their holdings in Taiwan and move their funds into U.S. dollar assets. The electronics sub-index ended down 1.34 percent. Among the falling electronics heavyweights, Taiwan Semiconductor Manufacturing Co., the most heavily weighted stock in the local market, fell 2.00 percent to close at NT$122.50, and integrated circuit designer MediaTek Inc. shed 2.74 percent to end at NT$443.00. Smartphone camera lens supplier Largan Precision Co. lost 1.30 percent to close at NT$2,275.00, and Hon Hai Precision Industry Co. fell 0.92 percent to end at NT$96.70. The two firms are part of Apple Inc.'s supply chain. In the non-high-tech sector, Nan Ya Plastics Corp. shed 1.98 percent to close at NT$64.50, while Wei Chuan Foods Corp. lost 7 percent, the maximum daily decline, to end at NT$33.60 amid concerns over food safety. "I expect the local bourse will continue to consolidate and even trend lower over the next few sessions. If the index fails to remain above the 220-day moving average at 8,860 points, more selling could follow," Huang said. (By Frances Huang)


Updated : 2021-04-15 17:09 GMT+08:00