Shares in Taiwan continued their fall Friday as lingering concerns over the consequences of the U.S. Federal Reserve’s aggressive interest rate hikes to quell inflation weighed down market sentiment, dealers said.
The bellwether electronics sector led by large-cap semiconductor stocks came under pressure in the wake of a spike in the yield of American 10-year Treasury bills overnight, which pointed to expectations of higher interest rates, dealers said.
The Taiex, the Taiwan Stock Exchange’s main benchmark index, ended down 126.90 points, or 0.98 percent, at 12,819.20 after moving between 12,813.60 and 12,954.02. Turnover totaled NT$156.64 billion (US$4.87 billion).
Overnight U.S. markets
The market opened down 0.12 percent on a lackluster showing by indexes in the United States, with the Dow Jones Industrial Average losing 0.30 percent and the tech-heavy Nasdaq index dropping 0.61 percent overnight.
That weakness came after two Fed officials — Philadelphia Fed President Patrick Harker and St. Louis Fed President James Bullard — maintained hawkish tones on rate hikes, pushing the 10-year Treasury yield to 4.2 percent for the first time since 2008, dealers said.
The Taiex faced more downward pressure, in particular from semiconductor heavyweights such as Taiwan Semiconductor Manufacturing Co. (TSMC), while select petrochemical and financial stocks appeared resilient, dealers said.
“The local market remained affected by concerns over aggressive rate hikes by the Fed, in particular after the comments by the two Fed officials overnight,” Cathay Futures Consultant analyst Tsai Ming-han said.
“Tech stocks were hurt again by a fund exit from Taiwan as the U.S. dollar kept its momentum against the Taiwan dollar, driven by the rate hike cycle,” Tsai said.
The market has widely anticipated the Fed will increase its key interest rates by 75 basis points in November after a 300-basis point hike since March to take on inflation.
Tech stocks
The electronics sector fell 1.48 percent, and the semiconductor sub-index dropped 1.84 percent after TSMC, the most heavily weighted stock in the local market, shed 2.01 percent to close at NT$389.50.
TSMC’s losses alone contributed about 70 points to the Taiex’s fall Friday.
“Yesterday, government-led funds jumped in late in the session to prop up TSMC. But that buying seemed to disappear today with the Taiex coming under pressure,” Tsai said.
Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, lost 1.14 percent to end at NT$39.05, and smartphone IC designer MediaTek Inc. closed down 0.53 percent at NT$567.00.
In addition, application-specific integrated circuit (ASIC) designer Alchip Technologies Ltd. shed 7.88 percent to end at NT$620.00, while dynamic random access memory (DRAM) chip supplier Nanya Technology Corp. closed unchanged at NT$55.90 percent.
IC packaging and testing services provider ASE Technology Holding Co. bucked the downturn, rising 0.39 percent to end at NT$76.30.
EV-related companies
Outperforming the Taiex, iPhone assembler Hon Hai Precision Industry Co. rose 0.98 percent to close at NT$103.50 as buying was sparked by its efforts in developing electric vehicles.
Yulon Motor Co., an EV partner of Hon Hai, soared 8.95 percent to end at NT$45.05 as the SUV model — the n7 — its subsidiary Luxgen Motors is building based on Hon Hai’s prototype Model C received considerable pre-order sale interest.
The interest in Yulon spread to other auto stocks, with China Motor Corp. rising 1.83 percent to close at NT$41.70, and Hotai Motor Co., a local sales agent of Toyota, rising 0.91 percent to end at NT$55.70.
“As TSMC did not receive support from government-led funds today, buying rotated to some old economy and financial stocks,” Tsai said.
The petrochemical sector rose 0.36 percent after Formosa Petrochemical Corp. moved 2.07 percent higher to close at NT$79.00 and Formosa Plastics Corp. gained 1.24 percent to end at NT$81.80.
Nan Ya Plastics Corp. closed unchanged at NT$67.60 but came off a low of NT$66.70.
Financial sector
In the financial sector, which rose 0.23 percent, Mega Financial Holding Co. rose 1.71 percent to end at NT$29.70, and CTBC Financial Holding Co. added 1.52 percent to close at NT$20.00.
But Cathay Financial Holding Co. shed 3.43 percent to end at NT$36.55 as investors feared a rights issue plan to raise its paid-in capital by NT$45 billion will dilute its earnings per share, dealers said.
“In addition to rising interest rates, investors should also monitor the current earnings season. Several tech giants, including Apple Inc., will release their third quarter results and give guidance for the fourth quarter next week,” Tsai said.
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$6.23 billion in shares Friday, when the U.S dollar rose NT$0.081 to close at NT$32.188 against the Taiwan dollar.
Source: Focus Taiwan News Channel