Taiwanese shares nosedived yesterday, breaking an important 10-year-moving-average mark and prompting calls for the government to lower taxes, help ease the credit crunch, reverse slumping consumer confidence and boost the business climate.
The TAIEX plunged 172.3 points, or 2.61 percent, to close at 6,412.63 on turnover of NT$91.19 billion (US$2.81 billion), Taiwan Stock Exchange data showed.
Analysts attributed the fall chiefly to panic selling by domestic investors after President Ma Ying-jeou (馬英九) said a day earlier that he could not honor his campaign pledge to achieve economic growth of 6 percent and raise annual per capita income to US$30,000 during his four-year term.
Winson Wang (王榮旭), a stock analyst at Marbo Securities Consultant Co (萬寶證券投顧), said foreign fund managers could not be blamed for the market’s bearish performance yesterday, as they sold only NT$7.7 billion in shares.
“Rather, domestic investors calculated it was better to sell their stock now since the government has no intention of fixing the economy in the near future,” Wang said by telephone.
Wang voiced concern that the TAIEX would fall further, as margin traders may be forced to sell in the coming few days. The TAIEX has dived 633 points so far this week, or 9 percent, from last Friday, when the index stood at 7,064 points.
The business community called on the government to help boost investor and consumer confidence by lowering taxes and other measures.
You Ching-fang (尤錦芳), an official at the securities association, said the government should speed up lowering corporate income tax.
Yu made the call during a forum on how to stimulate domestic demand as the Tax Reform Committee met to address how to make the taxation system fairer and better facilitate economic growth.
You also advised the government to retain the part of the Statute for Upgrading Industries (促進產業升級條例) that exempts corporate bond transactions from tax. The statute expires at the end of next year.
Yu Chun-ming (余俊明), deputy secretary-general of the construction association, suggested the government abolish inheritance and gift taxes altogether to help attract foreign capital.
“Inheritance and gift taxes run counter to the government’s effort to make Taiwan a regional financial hub. Hong Kong and Singapore have both abolished the levy,” Yu said.
Financial Supervisory Commission Deputy Chairman Wu Tang-chieh (吳當傑) said the local stock market was relatively stable.
Wu said the TAIEX had dropped 24.6 percent this year, while its counterpart in Singapore had declined 24.76 percent and China’s main index had fallen 57.2 percent.
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