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Taiwan stocks tumble along with Wall Street

TAIPEI, Taiwan -- Taiwan share prices plummeted with an almost identical drop along with overnight losses on Wall Street, pulling the TAIEX index further back from the widely anticipated ascent to the magic 10,000 points.

The weighted price index of the Taiwan Stock Exchange fell 362.64 points, or 3.9 percent, to 8937.58 on turnover of NT$166.12 billion.

Only 17 of the 649 stocks traded on the exchange amid growing concerns about the repercussions of U.S. subprime mortgage loan fallout, mounting writeoffs by leading financial institutions, weakening U.S. dollar, and soaring materials prices.

The index measure fluctuated in a range between 8,890.10 and 9,105.63 and even plunged as deep as 410 points, or 4.5 percent, during the final hour of the session.

The figure pared earlier loss only after certain parties moved in to help prop up the index.

The big drop yesterday translated into a huge loss of close to NT$900 billion in one single day.

Foreign investors were among the heavy sellers for profit-taking.

All sectors were down, including electronics, which fell 4 percent partly because of a wave of margin calls in chip-design shares.

Hon Hai Precision Industry, Taiwan’s biggest electronics company and a manufacturer of iPod music players for Apple Inc. dropped NT$11.50, or 5 percent, to hit a five-month low of NT$216.50.

Taiwan Semiconductor Manufacturing Co., the world’s biggest supplier of made-to-order chips, declined NT$1.10, or 1.8 percent, to NT$61.90.

United Microelectronics Corp., the world’s second-largest custom-chip maker, fell 35 cents, or 1.8 percent, to NT$19.35.

Even the high-flying suppliers of products related to solar energy, the stars on the stock market, went lower.

High Tech Computer, a producer of smart phones and PDAs, has fallen back to under the NT$600 mark.

Quite a number of shares in the electronics sector have lost around half of market value in the past three months.

Investors have been betting on a sustained surge since July on hopes of the upcoming legislative election in January and the presidential election in March.

Several attempts to rise over the 10,000-point mark have failed.

The cumulative drop for the past seven days amounted to a loss of almost 1,000 points.

The movement of Taiwan share prices will remain largely parallel to the markets in the U.S. and Europe because there is still no sight of an end to the financial turmoil, as few people are aware of the true nature of the problems confronting the multinational financial institutions and securities houses based in the U.S., according to securities analysts.

Unless Wall Street stages an immediate turnaround, the Taipei bourse is bound to undergo a protracted period of correction, they said.

The latest big drag downward by the New York stock market to under 9,000 points could mean that the widely expected surge being induced by Taiwan elections would be pushed back for a period of about one month, some analysts said.

In addition, the price fluctuations of crude oil, other commodities, the greenback, and possible inflation will also be among the major factors dictating the local equity market.

Some thought the index will now test the range between 8,800 and 9,200.

Some bullish analysts suggested that investors planning to rebuild their portfolio should pick companies with persistent earning strength at bargain prices.

But while doing this, investors should not divert their eyes from Wall Street movements and the stock markets in China and Hong Kong, they said.

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