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Local bourse hit after European elections

2012/05/07 17:21:43

Taipei, May 7 (CNA) Share prices in Taiwan plunged 2.11 percent Monday after the results of national elections in France and Greece called into question the future of austerity measures in the eurozone and the Greek bailout package.

The weighted index closed down 162.87 points, or 2.11 percent, at 7,538.08, after moving between 7,608.35 and 7,515.69. Turnover during the session totaled NT$78.67 billion (US$2.68 billion).

The local bourse will likely be in a correction mode in the short term as the election results may further affect stock markets in Europe and the United States, said Wang Chao-li, vice president of Polaris Securities Co.

Wang noted, however, that the local bourse will also be affected by other issues, such as the government's policy on capital gains tax on stock investments and rising business costs and consumer prices following hikes in fuel and electricity prices.

All of the market's eight major stock categories closed down, with the financial sector and the machinery and electronics sector coming under the strongest selling pressure.

Financial shares were down 2.2 percent and machinery and electronics issues lost 2.1 percent.

Cathay Financial Holdings Co., the nation's largest financial holding company by assets, lost 2.69 percent to finish at NT$30.80. Chinatrust Financial Holding Co. the nation's third-largest financial services provider, closed down 2.64 percent at NT$18.45.

Among large cap electronics stocks, the share prices of the nation's two biggest contract chip makers -- Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. -- fell 2.28 percent and 4.92 percent, respectively, to close at NT$85.60 and NT$14.50.

Plastics and chemical shares and food shares were also hard hit, falling 2.2 percent and 2.1, respectively.

Cement shares closed down 1.8 percent, textile stocks finished down 1.7 percent, construction stocks lost 1.1 percent and paper and pulp shares shed 0.2 percent.

A total of 1,045 stocks closed up and 3,351 finished down, while 185 remained unchanged.

Investors will likely pay close attention to the comments of French President-elect Francois Hollande this week, SinoPac Securities said, predicting that the market's benchmark index would range between 7,500 and 8,000 this week.

During his presidential campaign, Hollande opposed the fiscal austerity pact agreed to by the leaders of 25 European nations and threatened not to pass it unless it contains measures to spur on growth.

In Greece, voters rejected the two major parties -- and major proponents of the bailout package -- in a protest vote that could revive concerns over the country's ability to remain in the eurozone.

(By Hsu Hsiang-hsin and Hanna Liu)