Taiwanese shares took a nosedive yesterday following the report of losses by the nation’s largest electronics manufacturer as well as Wall Street’s 1.47 percent decline last Friday.
The TAIEX plunged 233.02 points, or 3.3 percent, to close at 6,813.091.47 on turnover of NT$88.82 billion (US$2.81 billion).
Analysts said the slump reflected investors’ concern over profit losses posted by Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract maker of electronics, on Friday. Hon Hai’s stock tumbled limit down 6.9 percent to NT$149 at the close of trade.
Winston Wang (王榮旭), a stock analyst at Marbo Securities Consultant Co (萬寶證券投顧), said Hon Hai’s report gave the market, which has suffered through two months of sluggish trading, additional jitters
Hon Hai’s second-quarter profit plunged 24 percent to NT$11.9 billion, the report showed.
Wang said foreign fund managers also contributed to the downturn by selling NT$13.8 billion in shares, compared with NT$2.2 billion and NT$5.6 billion on Thursday and Friday respectively.
“The figures sent an unmistakable message that they are withdrawing funds from Asian stock markets,” Wang said by telephone.
Mike Chow (周道中), senior manager with Yuanta Core Pacific Securities Co (元大京華證券), said he was surprised by the scale of the drop, which he linked to the performance of the Dow Jones Industrial Average last Friday, when it shed 171.63 points.
“There is no denying that the local bourse is closely tied to the US stock market, though I think [Taiwanese] investors overreacted this time,” Chow said by phone.
He said declining raw materials and oil costs are positive signs of US economic recovery however slow the pace may be.
All eight major stock categories lost ground yesterday, with machinery and electronics shares reporting the biggest drop at 4.3 percent.
Meanwhile, the NT dollar slipped by NT$0.073 to trade at a six-month low of NT$31.593 against the greenback on turnover of US$1.313 billion.
Chow expects the central bank to allow the NT dollar to depreciate further to help boost exports at a slow but steady pace, although he speculated the currency would weaken to trade at NT$32 against the greenback later this year.
Wang said a stronger US dollar would help bring down oil and raw materials costs and help rein in imported inflation.
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