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Taipei: Shares plunge as much as 7.49% in worst ever intra-day drop
[TAIPEI] Taipei shares tumbled more than seven per cent Monday in the island's steepest ever intra-day decline, weighed down by a slump in Chinese equities and a stagnant domestic economy.
The losses came amid a rout in Asian stock markets, led by a more than eight per cent fall in Shanghai, after concerns about the Chinese economy sparked a sell-off globally.
Taipei stocks tumbled 583.85 points to 7,203.07 in morning trading, a drop of 7.49 per cent.
The weighted index closed at 7,410.34, shedding 376.58 points or 4.84 per cent, after the cabinet held an emergency meeting mulling government intervention to prop up the market.
After the meeting, government spokesman Sun Lih-chyun told reporters: "Vice-premier Chang (Shan-cheng) has made it clear during the meeting asking the four pension funds to play a greater role in the market," referring to government funds worth more than US$230 billion.
He did not give details on possible ways to stabilise the market.
The government on Sunday imposed measures to stabilise stocks after heavy recent losses, including banning short-selling below the previous session's closing prices and encouraging banks to buy back their shares.
"Given the close economic ties with China, the slowing economy in China has hurt Taiwan economically, aggravated by the crash of Chinese markets," Mason Li, head of Taishin Securities Investment Advisory, told AFP.
Previously frosty ties with China have warmed under current Beijing-friendly president Ma Ying-jeou, leading to trade deals in an attempt to boost the domestic economy.
However, Taiwan's growth has continued to slow as growth in its giant neighbour stalls, and as local companies struggle to compete with Chinese manufacturers and technology companies.
"The rise of Chinese supply chains competes with local suppliers," said Li.
Taiwan this month slashed its growth forecast for 2015 to a lower-than-expected 1.56 per cent, citing weak demand for its exports and stiffer competition from China in the vital tech sector.