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Local shares down on geopolitical tensions

TAIPEI, Taiwan -- Shares in Taiwan extended their losses on Friday amid escalating geopolitical tensions after U.S. President Barack Obama authorized air strikes in northern Iraq, dealers said.

Despite slight outflow of international capital, the local equity market is expected to stage rebound in the near term, Financial Supervisory Commission Chairman Tseng Ming-chung (曾銘宗).

The weighted index on the Taiwan Stock Exchange closed down 45.48 points, or 0.49 percent, at 9,085.96, after moving between 9,014.89 and 9,102.20, on turnover of NT$85.31 billion (US$2.84 billion).

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At the fifth “Peace and Prosperity Forum” (兩岸和平創富論壇) held in Taipei, Tseng expressed an upbeat outlook for Taiwan's equity market.

Being asked to speak about the trend of local shares, Tseng said recent corrections will prove a short-term twist.

On the basis of internal and external solid economic fundamentals, as well as ample market liquidity, Tseng said the uptrend is not yet over.

The market opened down 0.12 percent in the wake of the weakness on Wall Street overnight, and selling escalated on the news that Obama had authorized “targeted airstrikes” in Iraq in a bid to protect American personnel and help Iraqi forces, dealers said.

As the index moved closer to the 9,000-point mark, bargain hunting emerged to help the broader market recoup some of its earlier losses at the close, they said.

“Market sentiment has been badly hurt since Tuesday's steep drop. The situation in the Middle East has now dealt another blow to investor confidence, and it was no surprise that the index kept falling today,” Grand Fortune Securities analyst Chen Wei-tai said.

“Many investors feared that global equity markets will be affected by any military action in Iraq. They preferred to cut their holdings for the moment before anything bad happens,” the analyst said.

Chen said the economics minister's tendering of his resignation was also seized on by investors as a reason to cash in their holdings as the local market remained unstable. Chang's resignation has not been approved by the Cabinet as of press time.

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