Taiwan region's stocks drop amid jitters over rising tension, even as Asian markets recover
Published: Aug 04, 2022 09:32 PM
A trader follows the trend of the stock market File photo: VCG

A trader follows the trend of the stock market File photo: VCG

Stocks in the island of Taiwan continued to fall sharply on Thursday, even as major Asian markets closed higher, underscoring jitters among investors over the rising tension in the Taiwan Straits after US House Speaker Nancy Pelosi's reckless trip and the mainland's strong countermeasures.

Analysts warned that the island's economy could face further turmoil, as the secessionist authorities on the island continue to cozy up to Washington in challenging China's core interests.  

At the close of trading on Thursday, the three major stock indexes on the Chinese mainland were higher and the Hang Seng Index in Hong Kong was up 2.06 percent. Japan's Nikkei 225 Index was up 0.69 percent, and the KOSPI Index in South Korea was up 0.47 percent.

However, the TAIEX closed 0.51 percent lower on Thursday at 14,707.2 points. It fell to a low of 14,545 points during the day. Local media outlets said that the fall of the stock market was due to the impact of political factors and mainland military practices.

The fundamental reason why the Taipei stock market continues to fall is that the Democratic Progressive Party is bent on pursuing "Taiwan independence" secessionism instead of paying attention to economic development, Zhang Wensheng, deputy dean of the Taiwan Research Institute at Xiamen University, told the Global Times on Thursday.

Zhang said that the decline of Taiwan stocks on Thursday was actually due to the impact of the situation across the Taiwan Straits.

Starting on Wednesday, customs offices of the Chinese mainland suspended the entry of citrus fruits and fish from the Taiwan region in accordance with the mainland's regulations and food safety requirements. 

Exports of natural sand from the mainland to Taiwan were also suspended.

The food sector of the Taipei stock market fell the most, with a 3.06 percent loss on Thursday. According to estimates by some local media, the mainland has suspended imports of 2,066 items of food from the island of Taiwan, which involved more than 100 businesses, or 64 percent of all registered businesses in Taiwan.

The construction and cement sector on the Taipei market fell 1.4 percent on Thursday.

"Were it not for the strong performance of the semiconductor industry due to the pandemic, the Taiwan region's economic environment would actually be deteriorating," Zhang noted.

Foreign capital has been continuing to flow out of the island's market since the beginning of the year.

According to statistics from the island's stock exchange, so far this year, foreign investors had sold a total of NT$991.5 billion ($146.8 billion) in shares as of Wednesday. 

It is estimated that the total outflow of foreign capital will exceed NT$1 trillion after Thursday closing.

"If cross-Straits relations do not improve, the trend of outflow of foreign capital and departure of foreign investors from the [Taiwan] market may not ease," a Taiwan media report said, citing a senior analyst.

Global Times