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Early gains in local bourse erased as debt concerns linger

2012/05/24 15:35:50

Taipei, May 24 (CNA) Early gains in the local bourse were erased Thursday, sending the index into negative territory at the end of the session, as doubts resurfaced over the European debt situation, dealers said.

Optimism that European leaders would come up with concrete measures in their ongoing informal talks to deal with their debt problems has receded, prompting investors to lock in profits after a the bourse rebounded mildly in morning trading, dealers said.

The weighted index closed down 22.86 points or 0.31 percent at 7,124.89, after moving between 7,090.47 and 7,190.55. Turnover totaled NT$64.24 billion (US$2.18 billion) during the session.

The market opened up 0.21 percent and moved to the day's high on a technical rebound from a 1.74 percent plunge in the previous session. Profit-taking followed, wiping out the early gains as sentiment toward the European financial situation remained cautious, dealers said.

However, it is believed that after the index fell below the 7,100 point mark, government-run funds intervened to prevent further losses on the broader market by the end of the session, they said.

"The Greece problem continues to dictate the movement of the markets at home and abroad," said Horizon Securities analyst Benson Huang. "Without any breakthrough in the European financial crisis, it is not easy for the local bourse to get out of the current doldrums."

Huang said there have been worries over Greece’s possible exit from the eurozone, and market attention has been shifting heavily to the new parliamentary elections in the European country scheduled for June 17.

In addition, although many investors are hoping Europe will issue euro bonds to finance debt-ridden countries like Greece, the idea has been strongly opposed by Germany, Huang said.

"I do not think the current informal meeting of the European leaders will produce any concrete measures on the matter," Huang said.

In Taiwan, the government's support is expected to continue, but ifthe local bourse does not hold above 7,000 points due to the European problems, the index may test the 6,800-point mark in the short term, he said.

At the end of the session, the paper and pulp sector suffered the heaviest losses among the eight largest sectors of the market, finishing down 1.26 percent. Construction stocks lost 1.19 percent, textiles shed 0.82 percent, foodstuffs fell 0.78 percent, and financials closed down 0.75 percent.

Plastics and chemicals fell 0.46 percent, and machinery and electronics lost 0.18 percent, while the cement sector closed up 0.17 percent.

Bucking the downside of the broader market, Taiwan Semiconductor Manufacturing Co. closed up 1.90 percent at NT$80.60 on buying from government-run funds.

HTC ended up 1.78 percent at NT$430.00 after the local media reported that the company had regained its place as biggest smartphone supplier in Taiwan on the back of strong sales of its new model.

(By Frances Huang)
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