Shares in Taiwan slid Friday, hurt by growing worries over inflation after the United States reported a 7.9 percent increase in its consumer price index in February, the highest in 40 years, dealers said.
The failure to find a breakthrough in the fourth round of ceasefire talks between Russia and Ukraine also set off selling, with the electronics sector hit particularly hard, they said.
The Taiex, the Taiwan Stock Exchange’s benchmark index, ended down 168.46 points, or 0.97 percent, at 17,264.74, after moving between 17,239.90 and 17,373.90. Turnover totaled NT$262.77 billion (US$9.25 billion).
After surging 2.46 percent Thursday, the Taiex opened down 0.34 percent on Friday and selling escalated as investors trimmed their holdings in the tech sector, in particular large-cap semiconductor stocks.
U.S. markets fall overnight
They were reacting to a 2.17 percent plunge by the Philadelphia Semiconductor Index and a 0.95 percent fall by the tech-heavy Nasdaq index Thursday amid rising fears that the U.S. Federal Reserve will take more aggressive action after the CPI spike, dealers said.
Old economy stocks in the shipping and raw material sectors appeared resilient, however, helping the broader market offset some of the tech losses, dealers said.
“The U.S. markets continued to dictate the mood in the local market as investors were stunned by rising inflationary pressure. The soaring CPI was largely the product of skyrocketing crude oil prices,” said stock market analyst Andy Hsu.
“A growing number of investors at home and abroad are convinced that the Fed will speed up the pace at which it raises key interest rates and cuts its balance sheet,” Hsu said.
The Fed will hold a two-day policymaking starting March 15. Taiwan’s central bank is scheduled to hold a quarterly policymaking meeting on March 17.
“Investors shifted to the sell side today after yesterday’s rally,” Hsu said. “Expectations of higher interest rates meant that tech heavyweights and their relatively high valuations got punished, with TSMC the biggest target,” Hsu said.
Tech sector
TSMC, the most heavily weighted stock on the market, lost 2.04 percent to close at NT$575.00 and accounted for 100 points of the Taiex’s decline.
It also contributed to a 1.30 percent fall in the electronics sector and a 1.87 percent slide in the semiconductor sub-index.
Among other falling semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, lost 0.57 percent to end at NT$52.50, and smartphone IC designer MediaTek Inc. shed 3.22 percent to close at NT$963.00.
Power management IC designer Silergy Corp., the most expensive stock in Taiwan, gave up its earlier gains, and closed 4.21 percent lower at NT$3,415.00 after the company announced a four-to-one stock split a day earlier to make the stock more affordable.
Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co. bucked the downturn, finishing 0.49 percent higher at NT$103.50. Flat panel maker AU Optronics Corp. rose 1.18 percent to end at NT$21.50, and rival Innolux Corp. added 0.58 percent to close at NT$17.35.
“When the electronics sector weakened, investors tended to park their funds in old economy stocks, and the shipping and steel industries benefited from such rotational buying,” Hsu said.
Shipping and steel
“Interest in the two industries was largely boosted by hopes that they will give generous cash dividends to push up dividend yields.”
In the transportation sector, which rose 0.91 percent, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 2.56 percent to end at NT$160.00.
Rival Yang Ming Marine Transport Corp. gained 1.21 percent to close at NT$125.50, and Wan Hai Lines Ltd. lost 0.85 percent to end at NT$175.00.
The steel industry rose 0.97 percent, with Tung Ho Steel Enterprise Corp. closing 6.92 percent higher at NT$77.30, and Chun Yu Works & Co. up 3.10 percent to end at NT$31.55.
Also, Chung Hung Steel Corp. rose 1.87 percent to close at NT$43.60, and China Steel Corp., Taiwan’s largest steel maker, finished 0.39 percent higher at NT$38.45.
Other sectors
Select petrochemical stocks moved higher on the back of high crude prices, dealers said. Formosa Plastics Corp. rose 1.43 percent to close at NT$106.50, and Taita Chemical Corp. added 2.45 percent to end at NT$33.45.
In the financial sector, which fell 0.63 percent, Fubon Financial Holding Co. lost 1.49 percent to close at NT$72.70, while Cathay Financial Holding Co. ended unchanged at NT$60.30, and E. Sun Financial Holding Co. gained 0.17 percent to close at NT$29.95.
“There is no immediate sign of an end to the Russia-Ukraine war so geopolitical tensions are expected to continue to weigh on global markets,” Hsu said. “The Taiex could test 17,000 points in the short term.”
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$22.65 billion in shares on the market Friday.
Source: Focus Taiwan News Channel