Taiwan Stocks Due For Mild Recovery

(RTTNews) - The Taiwan stock market has finished lower now in four straight sessions, shedding nearly 500 points or 8 percent in that span. The Taiwan Stock Exchange has fallen all the way to support at 5,700 points - dropping almost 19 percent last month - but now the market is tipped to begin a modest rebound when it opens on Wednesday.

The global forecast is a positive one as most of the Asian markets suffered heavy losses on Tuesday, plummeting after Wall Street's sharp decline as the U.S., government's rescue package for the troubled financial sector failed to receive congressional approval. Investors are hopeful that some incarnation of the relief package may be approved in the near future, likely resulting in a correction among the Asian bourses.

The TSE finished sharply lower on Tuesday, dragged significantly to the downside by weakness among the heavily weighted financial and technology issues. Construction and steel stocks also saw major declines.

For the day, the index dropped 210.35 points or 3.55 percent to close at 5,719.28 after dipping as low as 5,534.72 on turnover of 69.58 billion Taiwan dollars. There were 1,522 decliners and 203 gainers, with 262 stocks finishing unchanged.

Among the decliners, Cathay Financial, Hon Hai, HTC Corp, Taishin Financial and United Microelectronics (UMC | Quote | Chart | News | PowerRating) all fell by the daily limit of 7 percent, while Taiwan Semiconductor Manufacturing Co (TSMC | Quote | Chart | News | PowerRating) slipped 1.78 percent.

Wall Street provides a positive lead as stocks ended Tuesday's session with standout gains, offsetting more than half of the massive sell off seen in the previous session. Investors were encouraged to look for bargains on renewed hopes that the government's proposed $700 billion rescue plan could get passed.

The House of Representatives on Monday failed to muster the support needed to pass a financial rescue package aimed at restoring stability to the financial system and easing a pending credit crunch. The bill would have allowed the government to buy up to $700 billion of mortgage-related assets, which have become nearly impossible to get rid of after the slump in housing prices. Experts identify these illiquid assets as the source of the financial difficulties that have forced a series of bankruptcies and near-bankruptcies of some of the country's biggest financial firms.

The vote on the Emergency Economic Stabilization Act failed by a count of 205 in favor to 228 opposed. More than half of the House Democrats voted for the measure, which was originally put forward by the Bush administration. Only a third of House Republicans backed the measure. Nonetheless, political leaders have made assurances that the bill is not dead yet. President George W. Bush made a statement earlier in the day assuring the public that something could be worked out.

The Conference Board said that consumer confidence unexpectedly improved in the month of September, rising to 59.8 in September from an upwardly revised 58.5 in August. Economists had expected the index to fall to 55.0 from the 56.9 originally reported for the previous month.

The major averages saw additional buying interest in the final hour of the day, closing just off of their intraday highs. The Dow closed up 485.21 points or 4.7 percent at 10,850.66, the Nasdaq closed up 98.60 points or 5 percent at 2,082.33 and the S&P 500 closed up 58.35 points or 5.3 percent at 1,164.74.

Despite the strong gains, the major averages all still closed lower for both the month of September and the third quarter. The Dow posted a monthly loss of 6 percent and showed a 4.4 percent decline for the quarter. The Nasdaq and the S&P 500 posted monthly losses of 12 percent and 9.2 percent, respectively, while they both fell about 9 percent for the quarter.

In economic news, the top financial regulator in Taiwan has banned investors from short-selling shares of any individual company, the Financial Supervisory Commission said on Tuesday. In its latest effort to support the stock market, the move is aimed at "preventing short-sellers from depressing the market and (AT | Quote | Chart | News | PowerRating) boosting investor confidence," the regulator said in a statement. The ban will be imposed from Oct. 1 to Oct. 14.

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