Share prices plunge on U.S., cross-strait MOU concerns

By closing, the weighted index TAIEX dropped 123.39 points, or 1.61 percent, to 7,533.95. A total of 3.73 billion shares changed hands on market turnover of NT$111.19 billion.

Foreign institutional investors were net sellers of NT$10.93 billion worth of shares. Investment trusts and securities firms each sold a net of NT$141 million and NT$1.754 billion, respectively. Altogether, the island's three major institutional investors sold a net of NT$12.829 billion.

Seven of the eight major stock categories lost ground, with textile stocks moving down the most at 2.57 percent. Plastics and chemicals declined 2.13 percent, cement stocks were down 1.98 percent, machinery and electronics shares shed 1.64 percent, and paper and pulp issues fell 1.48 percent.

Foodstuff issues, the other major stock category, gained ground, moving up 1.05 percent. Losers outnumbered gainers 1,965 to 652, with 184 stocks remaining unchanged.

Taiwan stocks' plunge followed a weak performance of U.S. shares in overnight trading.

Wall Street rose at the start of trading following a report that home prices in 20 major urban markets increased for the third straight month in August.

However, the gains in home prices couldn't offset worries that consumers might not be in a mood to spend this holiday season. The Conference Board said its Consumer Confidence Index fell unexpectedly to 47.7 in October, its second-lowest reading since May. Analysts had predicted a figure of 53.1.

By the end of trading, the Dow Jones Industrial Average rose 14.21, or 0.1 percent, to 9,882.17. The broader Standard & Poor's 500 index fell 3.54, or 0.3 percent, to 1,063.41, while Nasdaq fell 25.76, or 1.2 percent, to 2,116.09.

Here in Taiwan, financial shares rose on expectations of an imminent signing of the financial MOU and helped lift the TAIEX from its opening of 7,637.44 to 7,675.15.

However, things began to change after 10:30 a.m., when Financial Supervisory Commission (FSC) chairman Sean Chen said at the Legislative Yuan it would be “inappropriate” if the signing of the MOU took place at a meeting between heads of the Straits Exchange Foundation (SEF) and the Association for Relations Across the Taiwan Straits (ARATS) scheduled for December.

Banking shares then took a nosedive and eventually lost 1.83 percent at the end of trading.

The meeting will be the fourth such dialogue between SEF chairman P. K. Chiang and his Chinese counterpart Chen Yunlin. The meeting will be held in Taichung City this time.

“I haven't heard the MOU will be signed during the Taichung meeting,” the FSC head said. “I personally will not be at the meeting. The signing of a document of this magnitude should be done in my presence, in compliance with international standards.”

When pressed on when the signing will happen, Chen said it will take place before next year. “I'm talking about the Western New Year, not the Chinese New Year,” he stressed.

Legislator Lai Shih-pao then asked Chen to give the status of the MOU signing, using Taiwan's railway as an analogy. “If Kaohsiung was the last stop, then I'd say we're at Zuoying, the station before,” Chen said.

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