Taiwan Construction Stocks Fall as Central Bank Maintains Property Curbs; Market Index Hits New High

Taiwan's construction stocks experienced a significant sell-off, falling 3% in early trading, after the Central Bank decided to maintain existing real estate credit control measures. The decision dashed hopes for any easing of restrictions, leading to disappointment among developers. This contrasts sharply with the broader market, where the benchmark stock index climbed over 1100 points to a new record high, buoyed by strong performances from technology giants like TSMC and UMC.

Central Bank Governor Yang Chin-long noted that the pace of a "soft landing" in the property market has been somewhat slow. Despite this observation, the bank opted not to introduce new easing measures during its recent meeting. The construction sector's decline saw several individual stocks drop by more than 5%, with some, like Crown Development, hitting their lower daily limit. This downturn highlights the sector's sensitivity to monetary policy and credit availability.

Despite the immediate disappointment for the construction industry, financial analysts remain cautiously optimistic about the property market's outlook. They anticipate a gradual bottoming out and recovery in the second half of the year. This forecast is based on the expected positive wealth effect from the stock market's surge and a narrowing year-on-year decrease in property transaction volumes. The market's resilience, as demonstrated by the index's record high, suggests underlying economic strength despite specific sector headwinds.

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The pace of a 'soft landing' in the property market has been somewhat slow.