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Monday, 13 March, 2000, 10:31 GMT
Taiwan stocks plunge

Markets fell on fears of a pro-independence victory
Taiwan stocks plunged on Monday as fears grow that the country's relationship with China could worsen after Saturday's presidential elections.

Among those contesting the vote with the ruling nationalist party is a pro-independence candidate.

If Taiwan declares independence, Beijing has threatened to invade.

Shares fell a record 617 points, or 6.55%, to close at 8,811.

This is the biggest fall since 1996, when Beijing tried to intimidate Taiwan's electorate by lobbing missiles into waters near the island.

'Stay calm'

Finance Minister Paul Chiu sought to calm investors, reminding them that economic fundamentals were strong.

"Investors should have confidence," Mr Chiu said.

He added that four major state funds had bought stocks to support the market.

Taiwan emerged relatively unscathed from the Asian crisis.

It had fewer debts than the other Asian tigers and was not burdened with the large deficits that helped bring about the crisis.

While growth slowed and there was some turbulence in the financial markets, unemployment remained low.

The race is on

Of the five presidential candidates, three have emerged with equal support.

These are the ruling party candidate, Lien Chan, Chen Shui-bian of the pro-independence Democratic Progressive Party and independent James Soong.

Some analysts said the ruling Kuomintang party - the world's richest political party with $6.15bn of assets - had sold shares on Monday to increase fears of what a pro-independence victory would mean.

"It appears that the KMT-linked funds have held equity investors hostage to ensure their support for Lien," Cooper Leow, manager of Jih Sun Securities Investment Consulting said.

Albert Lin, research vice president at Hotung Securities, said: "Many market players said the ruling party did not actively support the market to scare investors that Chen Shui-bian's victory might lead to war with the Chinese communists."

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07 Mar 00 | Asia-Pacific
Taiwan candidate rejects Beijing threat
06 Mar 00 | Asia-Pacific
China's army warns Taiwan
29 Feb 00 | Asia-Pacific
China renews Taiwan threat
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