Taiwan’s stocks entered a bear market amid concern China’s economic slowdown and currency devaluation will curb demand for the island’s technology products.
The Taiex index fell 3 percent to 7,786.92 at the close, the lowest level since June 2013. The benchmark gauge has tumbled more than 20 percent from a 15-year high on April 27, the threshold for a bear market. Taiwan Semiconductor Manufacturing Co., the biggest stock in the Taiex, dropped 4 percent.
A Chinese manufacturing gauge fell to the lowest level in more than six years, a private report showed on Friday. A deepening Chinese economic slowdown will hurt Taiwan’s exports at a time when the island is already facing the weakest domestic growth in three years. Foreign investors pulled a net $2.5 billion from the island’s shares this quarter, the most in Asia after Japan and South Korea.
“The Taiex is declining because of uncertainties in Taiwan and the global economy,” Parker Wu, a portfolio manager at the Agriculture Bank of Taiwan in Taipei, said by phone. “Taiwan’s GDP is weaker than expected. China’s economic slowdown and yuan depreciation are also worrying Taiwan stock investors. A key level is 7,800. If the market drops below that, it may mean investors are more pessimistic about the future.”
— With assistance by Cindy Wang