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Taiwan shares plunge, led by financial stocks

Taiwan shares plunge, led by financial stocks

Taipei, May 14 (CNA) Shares in Taiwan took a beating Thursday as the financial sector came under heavy pressure amid fears that a drop in property prices would hurt the bottom lines of banks that have made big loans to home buyers, dealers said. Those concerns arose from a decision by the Executive Yuan to raise capital gains tax rates, in the government's latest tax reform plan, dealers said. The fall in the broader market Thursday was also driven by property developers, which were hit by the tax rate hike, dealers said. While the bellwether electronics sector continued to trend lower in reflection of concerns over the slow season in the second quarter, select old economy stocks in the food sector moved up on improved profitability, dealers said. The weighted index on the Taiwan Stock Exchange closed down 113.28 points, or 1.16 percent, at 9,610.83, after moving between 9,600.24 and 9,734.55. Turnover during the session totaled NT$97.76 billion (US$3.19 billion). The market opened up 6.22 points at the day's high on follow-through buying from the previous session, but soon fell into negative territory as selling in the construction sector emerged, dealers said. Investors were taking into account the revised capital gains taxes aimed at the property market, dealers said. Concern over a slower property market also affected the financial sector, and the selling escalated as investors were worried that falling property prices would drive up the number of non-performing loans in banks, dealers said. "The financial sector had become a favorite of foreign institutional investors in recent sessions. I suspect that they simply seized the tax issue to lock in the gains they had built in financial stocks," said Marbo Securities Investment Consulting analyst Chang Chih-cheng. The capital tax revision raises the maximum tax levied on a property seller, from 35 percent to 45 percent, if a property is resold less than a year after its purchase. The taxes on other property transactions have also been raised to rates ranging from 12 percent to 35 percent. On Thursday, the financial sector closed down 2.66 percent at 1,198.38 points. Among the falling financial stocks, Fubon Financial Holding Co. (???) shed 4.97 percent to close at NT$63.10, and Cathay Financial Holding Co. (???) lost 3.07 percent to end at NT$53.60. "Until the May futures contracts are settled next week, foreign investors are likely to continue dumping financial stocks in the spot market. The financial sub-index could test the 1,165-point mark soon," Chang said. In the property sector, which closed down 1.66 percent, Farglory Land Development Co. (??) dropped 2.10 percent to NT$39.65 and Hung Ching Development & Construction Co. (??) fell 3.20 percent to NT$21.20. Among the high-tech stocks, Taiwan Semiconductor Manufacturing Co. (???), the most heavily weighted stock on the local market, fell 1.35 percent to close at NT$146.00, and rival Microelectronics Corp. (??) lost 1.43 percent to end at NT$13.75. The food sector closed up 1.27 percent with Uni-President Enterprises Corp. (??) ending up 2.45 percent at NT$54.30, after reporting a 3.3 percent year-on-year increase in first-quarter net profits. "Despite today's heavy losses, the index found some technical support at around 9,600 points, which may pave the way for a technical rebound soon," Chang said. (By Frances Huang)


Updated : 2021-09-29 08:01 GMT+08:00