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Local market dives amid China trade pact worries

TAIPEI--Shares in Taiwan fell sharply to end below 8,600 points Thursday as the financial sector faced further downward pressure amid growing uncertainty over a trade-in-services pact with China, dealers said.

Large-cap stocks, especially in the bellwether electronics sector, also encountered selling as investors were concerned about higher borrowing costs after the U.S. Federal Reserve hinted last night at an interest rate hike cycle starting in spring of next year, dealers said.

The weighted index on the Taiwan Stock Exchange closed down 92.13 points, or 1.06 percent at 8,597.33, after moving between 8,580.40 and 8,638.59 on turnover of NT$92.36 billion (US$3.03 billion).

The market opened down 0.59 percent on follow-through selling amid a political standoff over the service trade agreement as students protested in Taipei against the pact that was signed last June between Taiwan and China, dealers said.

The financial sector was hit hard amid concerns over the effects on its bottom line if the trade agreement remains stalled in the Legislature, dealers said.

Selling escalated and spread to other sectors as investors took cues from the losses incurred on Wall Street overnight after Fed Chair Janet Yellen said the U.S. central bank is likely to end its monthly stimulus program by fall and that a rate hike could be implemented in 2015.

“Looking at the losses incurred by market heavyweights, I think the selling was largely by institutional investors, in particular foreign ones, who are worried that the domestic political uncertainty will further drag down share prices,” said Concord Securities analyst Kerry Huang, referring to the cross-strait trade pact controversy. The financial sub-index closed down 1.35 percent amid protests by students who occupied the Legislative chamber for the third consecutive day.

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Huang said the trade agreement is unlikely to be passed in the current legislative session given the current chaos, which could hurt market sentiment toward financial stocks.

Among the losing financial stocks, Fubon Financial Holding Co. (富邦金控) fell 2.06 percent to close at NT$40.50, Yuanta Financial Holding Co. (元大金控) shed 1.95 percent to end at NT$15.10, and Cathay Financial Holding Co. (國泰金控) closed down 1.25 percent at NT$43.30.

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 TV panel price quotes level out after decline 
A man sits in the middle of a nearly empty trading floor of a brokerage firm in Taipei, yesterday. Impacted by a political standoff over the service trade pact with China and the imminent exit of the U.S. bond-buying program, the weighted index on the Taiwan Stock Exchange closed down 92.13 points, or 1.06 percent at 8,597.33 yesterday.

(CNA)

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