Taiwanese Stocks Decline Most in Five Weeks on Growth Concern

Taiwanese stocks fell the most in five weeks, led by technology and financial shares, after comments from the central bank governor raised concerns over the island’s economic recovery.

The Taiex Index (TWSE) sank 1.1 percent to 7,595.46, the biggest drop since Nov. 13. Taiwan Semiconductor Manufacturing Co., which accounts for 12 percent of the benchmark gauge, sank 1.3 percent to a three-week low. Cathay Financial Holding Co. (2882) slumped 2.8 percent, leading a gauge of financial stocks to the lowest level in more than a week.

The central bank left interest rates unchanged for a sixth straight meeting in an announcement made after stock markets closed yesterday. The decision was predicted by all 23 economists in a Bloomberg survey. Economic growth will be “steady and slow” next year as exports and private investment recover, Governor Perng Fai-nan said.

Perng’s comments were taken to mean that “Taiwan’s economy will recover at some point in time, but we don’t know when that’s going to be,” Henry Miao, an assistant vice-president at Hua Nan Securities Investment Management Co., said by phone from Taipei. “That created concern among investors. Also, the U.S. fiscal cliff issue seems to be unresolved. As the U.S. is one of Taiwan’s major export destinations, we will get impacted too.”

Officials from U.S. President Barack Obama’s administration told leaders of business and financial services groups that negotiations with House Speaker John Boehner have deteriorated in the past 24 hours, a person familiar with the meeting said. The U.S. is Taiwan’s second-largest trading partner. Exports make up 60 percent of the island’s gross domestic product.

The Taiex has gained 7.4 percent this year, poised for its biggest annual advance since 2010. The gauge, which jumped 6.3 percent in the past month, trades for 18.3 times estimated profit, approaching the highest level since January 2010.

“We have risen quite a bit this year, so there’s some sell-off,” Kevin Lee, a trader at KGI Securities Co., said by phone in Taipei today.

To contact the reporter for this story: Darren Boey at dboey@bloomberg.net.

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.

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