Taiwan shares plunge with Asian markets on Dubai debt

The steep fall was in line with the general decline on the Asian stock markets.

International institutional investors sold NT$23.26 billion worth of shares than they bought, setting the 15th biggest net-sale amount on record.

The key barometer TAIEX on the local bourse opened sharply lower with a drop of 124 points at 7,614.41 and hit a high of 7,633.5 before closing at the day's low of 7,490.91. This is the first time the index to finish lower than 7,500 since Nov. 6.

A total of 5.11 billion shares changed hands on market turnover of NT$141.12 billion.

All eight major stock categories lost ground with banking and financial shares plummeting 4.68 percent, the biggest drop of any sector.

Textile stocks declined 4.23 percent, construction category dropped 4.13 percent, foodstuff issues fell 4.1 percent, cement stocks shed 3.35 percent, paper and pulp issues were down 3.29 percent.

They were followed by plastics and chemicals shares that lost 3.17 percent while machinery and electronics shares declined 2.8 percent.

Losers outnumbered gainers 2,569 to 413, with 49 stocks remaining unchanged.

The share price drop yesterday expanded the drop in the total market value of all stocks by NT$493.16 billion to NT$1.917 trillion for the week.

But many securities analysts said the extension for debt repayment sought by Dubai caused mainly a stronger psychological impact than the practical financial or economic factors. They said that it is inevitable for a market correction following successive gains in recent weeks as many investors have been preparing to readjust their investment portfolios.

The report of the Dubai financial incident presented timely factor for profit-taking as the commodities prices and global stock markets have reached a plateau, they said.

The analysts said the Dubai event prompted many investors to take the sideline for the time being in order to wait out a settling down of the financial fallout in the Middle East nation.

But they generally discounted the possible severity of the financial incident because it is seen so far as rather moderate compared with other national financial crises in recent memory or the global financial meltdown erupted last year.

On the foreign exchange market, the U.S. dollar gained against the New Taiwan dollar on the Taipei Foreign Exchange, rising NT$0.101 to close at NT$32.345.

A total of US$1.33 billion changed hands during the day's trading.

The U.S. currency opened at NT$32.345 and fluctuated between NT$32.295 and NT$32.369.

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