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TAIEX plunges amid global crises

The weighted share price index of the Taiwan stock exchange yesterday plunged 2.97 percent to close under 6,900 points for the first time in over five months amid concerns over the worsening European debt crisis, U.S. economic slowdown and continuing uncertainty of the stock gains tax issue, according to market sources.

The market opened sharply down around 200 points in line with losses in U.S. equity markets last Friday. Wall Street was rattled by poor U.S. job growth, which slowed sharply for the third straight month in May, and the U.S. unemployment rate, which rose for the first time in nearly a year, dealers said.

The weighted TAIEX fluctuated between a high of 6,937.33 and a low of 6,857.35 before closing at 211.43 points, or 2.97 percent lower to settle at 6,894.66 on turnover of NT$77.21 billion (US$2.57 billion).

Amid the heavy bearish sentiment, as many as 3,473 shares suffered drops, with over 200 stocks falling by the maximum daily limit of 7 percent at some point during the session. By contrast, 1,073 stocks managed to post gains, while the remaining 91 issues closed unchanged.

Institutional Investors Oversell NT$3.3 Billion in Shares

Meanwhile, institutional investors posted a net overselling position of NT$3.3 billion during the session, including NT$2.7 billion registered by foreign institutional investors alone.

All the eight major share categories closed down, with the construction sector suffering the largest fall of 3.9 percent. The machinery and electronics sector finished 3.68 percent lower, textile stocks shed 3.26 percent, financial shares lost 3.22 percent, paper and pulp shares declined 2.45 percent, food stocks lost 1.76 percent, plastics and chemical shares dipped 1.58 percent, and cement shares finished down 1.39 percent.

Worth mentioning was that some major shares suffered heavier drop than minor shares, fueling bearish sentiment across the big board. For instance, Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip maker, closed down 4.26 percent at NT$76.80, the lowest level seen in the current Year of the Dragon. The market value of the firm's shares fell under the NT$2 trillion mark.

Major Shares Suffer Heavier Drops

Meanwhile, HTC Corp., Taiwan's leading maker of smartphones, saw its share price plunge by 6.64 percent to NT$387, the lowest level in 25 months.

As combined turnover of these two major shares accounted for over 10 percent of the total turnover of the bourse yesterday, the sharp decline of their share prices fueled downward pressure on the local bourse.

Among other major shares, Hon Hai Precision Industry Co. Ltd., which makes iPhones and iPads for Apple Inc., fell 3.87 percent to NT$82.

United Microelectronics Corp., the world's No. 2 contract chip-maker, closed down 5.58 percent at NT$11.85, and AU Optronics Corp. shed 6.72 percent to NT$11.10.

The local bourse also was held back by continuing uncertainty over a proposal to tax capital gains on securities domestically and the prolonged eurozone debt crisis, market analysts said.

They said the big things to watch for in the coming days and weeks will be the outcome of legislative deliberations over the capital

gains tax plan, the result of Greek parliamentary elections on June 17, and the U.S. Federal Reserve's next policy meeting on June 19-20.

Local Currency Falls NT$0.119

On another front, the New Taiwan dollar yesterday depreciated by NT$0.119 against the greenback to close at NT$30.05 in the Taipei foreign exchange market, with turnover reaching US$861 million.

The local currency opened low at NT$30.02 against the U.S. dollar and fluctuated between NT$30.015 and NT$30.066 before closing at NT$30.050.

Market dealers attributed the devaluation of the local unit to foreign institutional investors exiting the local bourse and remittance investment funds abroad.

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At a securities brokerage house in Taipei, an investor looks upset while staring at the across-the-board drop of shares listed on the local bourse (CNA)

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