Local losses extend on lack of confidence
July 14, 2012, 12:04 am TWN
TAIPEI -- The local bourse extended losses Friday from the previous session as market confidence remained haunted by worry over the global economy, dealers said.
Fears escalated that foreign institutional investors will continue to move their funds out of the country as the global financial markets face further volatility amid growth concerns, they said.
However, the losses at the end of the session were capped as the market was expecting the Chinese authorities to come up with measures to stimulate the economy after China reported its second quarter GDP growth below 8 percent, they added.
The weighted index closed down 26.66 points or 0.37 percent at 7,104.27, after moving between 7,103.71 and 7,158.85, on turnover of NT$62.99 billion (US$2.10 billion).
The market opened down 0.25 percent as investors took cues from an overnight fall on Wall Street, and worries over the global economic slowdown continued to weigh on market sentiment, the dealers said.
Selling focused on select large-cap stocks such as smartphone vendor HTC Corp. and PC supplier Acer Inc. to keep the index in negative territory at the end of the session, they said.
Concord Securities analyst Kerry Huang said that as there are few signs that the global economy will make a quick turnaround any time soon, investors were rushing to move their funds to the U.S. dollar.
"A stronger U.S. dollar has raised fears that foreign institutional investors will move more and more of their funds out of Taiwan, which is likely to further impact the local bourse," Huang said.
"With market confidence fragile, the local bourse simply could not get out of the current doldrums," Huang added.
Among the losing stocks, HTC fell 4.32 percent to close at NT$288.00 as many investors were still worried about its bottom line amid fierce competition from Apple and Samsung Electronics, while Acer ended down 3.02 percent at NT$28.90 after the company lowered its 2012 PC shipment growth target.
During the morning session, China reported that its economy for the second quarter grew 7.6 percent from a year earlier, easing from an 8.1 percent increase recorded a quarter earlier.
"The 7.6 percent growth is within market expectations, making many investors relieved," Huang said. "As the growth is still below 8 percent, it is possible that the Chinese authorities will come up with stimulus measures to lift the economy."
At the end of the session, the construction sector had suffered the heaviest losses among the eight major sectors of the market, finishing down 1.0 percent. Paper and pulp stocks fell 0.7 percent, machinery and electronics shed 0.5 percent, plastics and chemicals lost 0.4 percent, and foodstuffs closed down 0.3 percent.
Bucking the downtrend of the broader market, textiles gained 0.4 percent, and the cement and financial sectors closed up 0.2 percent.