Taiwan Shares Slide as Crisis at Chinese Property Giant Raises Financial Concerns
Shares in Taiwan plunged on Monday as fears mounted over the financial crisis triggered by China’s debt-ridden property behemoth, Country Garden. Investors grew increasingly worried that this crisis would lead to a depreciation of regional currencies, including against the U.S. dollar. The decline was led by the financial sector, which faced immense pressure in the wake of Country Garden’s troubles.
The Taiwan Stock Exchange’s weighted index, known as Taiex, ended the day down 1.25 percent at 16,393.66 points. The market opened with a 15.84-point decline, and the selling pressure persisted throughout the session as other regional markets, such as Tokyo and Hong Kong, also experienced significant drops.
Country Garden announced last Friday that it would halt the trading of 11 of its onshore bonds, further fueling investor concerns. The company’s liabilities had already reached 1.4 trillion Chinese yuan (US$192 billion) by the end of last year, and it faces significant payments on notes and bonds in September amounting to 7.8 billion yuan.
Many investors in the region fear that Country Garden’s massive debts could lead to a financial crisis similar to the collapse of Lehman Brothers in the United States in 2008. This apprehension has prompted worries that the Chinese yuan may sharply depreciate against the U.S. dollar, setting off a domino effect that could weaken other regional currencies and cause foreign funds to exit the region.
In such uncertain times, investors are wary of weakening liquidity, leading them to cut their holdings and withdraw their investments. As a result, the financial sector faced the heaviest pressure, closing down 1.88 percent. Major financial institutions, including Fubon Financial Holding Co., Cathay Financial Holding Co., China Development Financial Holding Co., and Mega Financial Holding Co., all experienced declines.
The sell-off of large-cap tech stocks in the United States at the end of last week, driven by concerns over inflation, also impacted Taiwan’s electronics sector. The sector lost 0.81 percent, and tech giants like Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. saw their share prices decrease. The semiconductor sub-index concluded the day down 0.99 percent.
Despite the overall decline in the tech sector, stocks related to artificial intelligence (AI) development provided some support. Companies such as Quanta Computer Inc. and Compal Electronics Inc. experienced gains, while iPhone assembler Hon Hai Precision Industry Co. benefited from reports of receiving large orders for AI servers.
The sell-off also extended to old economy stocks, with companies like Formosa Plastics Corp., Nan Ya Plastics Corp., Far Eastern New Century Corp., and Uni-President Enterprises Corp. experiencing declines. Overall, foreign institutional investors sold a net of NT$19.10 billion in shares on the market on Monday.
As the situation unfolds, investors remain vigilant and cautious amid concerns about the volatility of regional currencies and economic stability. The impact of Country Garden’s financial crisis on the broader market and the region’s economies remains to be seen.
Disclaimer: The information provided in this article does not constitute investment advice. Please conduct your research and consult with a financial advisor before making any investment decisions.
