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Widespread selling slams local market, TAIEX drops 1.76%

TAIPEI -- Lingering concerns over the global economy sent shares on the Taiwan Stock Exchange into a tailspin yesterday as investors rushed to unload their holdings to stop losses, dealers said.

While select large cap stocks such as Taiwan Semiconductor Manufacturing Co. (TSMC) appeared resilient throughout the session, selling was seen almost across the board amid fears that weakening global demand will squeeze corporate earnings, they said.

The weighted index closed down 128.02 points, or 1.76 percent, at 7,134.06, after moving between 7,132.77 and 7,298.48. Turnover was NT$89.68 billion during the session.

The market opened up 0.41 percent and moved to the day's high on a technical rebound from the previous session, but selling emerged as the index moved closer to the 7,300-point mark, dealers said.

Downward pressure escalated until the end of the session, dragging all of the major sectors down, as investors saw the decline of other regional markets such as Shanghai, Shenzhen, Seoul and Hong Kong, dealers said.

“The selling showed investors' lack of confidence in the market outlook amid concerns over the global economic fundamentals,” Concord Securities analyst Kerry Huang said.

“After the index fell below 7,200 points in the late morning session, stop-loss selling increased, pushing share prices even lower by the end of the session,” Huang said.

While the high tech sector remained weak amid fears that a rising Taiwan dollar will undermine Taiwan's exports, large-cap old economy stocks, in particular “China concept stocks,” took a beating as investors took cues from the heavy losses on the stock markets in Shanghai and Shenzhen, dealers said.

Among the losing China concept stocks, which have close business ties with China, Taiwan Cement fell 3.95 percent to close at NT$36.45, and Wei Chuan Foods shed 6.29 percent to end at NT$31.30.

In other sectors, Fubon Financial Holding dropped 3.85 percent to NT$30.00, and Highwealth Construction ended down 5.72 percent at NT$42.05.

Huang said select large-cap stocks bucked the downside of the broader market to close higher. TSMC, which posted a quarterly record high net profit in the third quarter, ended up 2.95 percent at NT$87.30.

Cellphone camera lens supplier Largan Precision rose 3.53 percent to NT$616.00 after it posted a more than 70 percent increase in net profit for the third quarter.

“I suspect the buying in TSMC came partly from government-led funds, but the move failed to shore up market confidence,” Huang said. TSMC is the most weighted stock on the local bourse.

“After the latest slump, the market has become technically fragile,” Huang said. “It may test the 7,000 point mark shortly.”

At the end of the session, the construction sector had suffered the heaviest losses among the eight major sectors of the market, finishing down 3.9 percent. Paper and pulp stocks lost 3.1 percent, and textiles and financials closed down 3.0 percent.

Cement, and plastics and chemical shed 2.6 percent, foodstuffs fell 2.3 percent, and machinery and electronics ended down 1.2 percent.

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