Shares in Taiwan moved lower Monday but losses were limited amid renewed concerns over COVID-19 as indigenous cases a day earlier surged to the highest level since early June 2021, dealers said.
Selling on the local main board was also sparked by worries over a possible aggressive move by the U.S. Federal Reserve to raise interest rates at a time when inflationary pressure continues to increase, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 156.94 points, or 0.89 percent, at 17,520.01, after moving between 17,368.66 and 17,527.15. Turnover totaled NT$234.77 billion (US$8.16 billion).
The market opened down 0.94 percent and downward pressure soon escalated causing the Taiex to drop by 308 points in the early morning session in the wake of a Sunday tally in which the number of domestically transmitted COVID-19 cases hit 83, the highest daily total since June 7, 2021, when cases totaled 88, dealers said.
With the Taiex falling below the 20-day moving average of 17,446 points at one point, some bargain hunters turned active to pick up large cap tech stocks, helping the local main board recoup part of its earlier losses by the end of the session, dealers added.
“The spike in indigenous COVID-19 cases surprised investors,” Hua Nan Securities analyst Kevin Su said. “So, they simply scrambled to dump their stocks soon after the local equity market opened.”
In addition, the soaring 10-year U.S. treasury yield reflected fears that the Fed will take more aggressive steps to contain skyrocketing inflationary pressure, Huang said, referring to the yield topping 2.5 percent, the highest in two years, at the end of last week.
“There are growing fears that the Fed will raise its key interest rates by 50 basis points in May after a 25 point hike in March,” Su said. “The high tech sector was in focus amid Monday’s selling as fears over rising interest rates once again made them look less attractive.”
The electronics sector lost 1.37 percent with the semiconductor sub-index down 1.91 percent.
“However, the silver lining was that the Taiex came off its earlier low as select semiconductor stocks, including TSMC (Taiwan Semiconductor Manufacturing Co.), recovered part of their earlier losses. I suspect the bargain hunting partly came from government-led funds in a bid to prevent the Taiex from falling too much,” Su said.
Chipmaker TSMC, the most heavily weighted stock on the local market, lost 2.34 percent to close at NT$584.00, off a high of NT$580.00. “The stock saw technical support at around the 20-day moving average of NT$581.00,” Su said.
Among other semiconductor stocks which also benefited from bargain hunting, smartphone IC designer MediaTek Inc. lost 0.72 percent to end at NT$964.00, and IC packaging and testing services provider ASE Technology Holding Co. dropped 0.96 percent to close at NT$103.50.
On the other hand, United Microelectronics Corp., a smaller contract chipmaker, rose 0.56 percent to close at NT$53.60, and application specific IC Alchip Technologies, Ltd. gained 1.88 percent to end at NT$1,085.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. closed unchanged at NT$106.00, but Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., shed 3.31 percent to end at NT$1,900.00.
Despite the plunge on the Taiex, the worries over the spread of COVID-19 prompted some investors to pick up select COVID-19 prevention stocks throughout the session, Su said.
Among them, shares in face mask makers KNH Enterprise Co. and Universal Inc. surged 10 percent, the maximum daily increase, to close at NT$25.55 and NT$44.85, respectively, and test kit supplier Panion & BF Biotech Inc. rose 2.29 percent to end at NT$98.20.
Su said COVID-19 concerns also boosted logistics stocks in the transportation sector, which rose 0.94 percent, as investors hope the disease will increase the need for online shopping.
Among the logistics stocks, Evergreen International Storage & Transport Corp. rose 3.07 percent to close at NT$36.95, and Kerry TJ Logistics Co. gained 6.04 percent to end at NT$44.80.
Riding the wave of rising interest rates, the financial sector ended up 0.33 percent. Fubon Financial Holding Co. rose 0.13 percent to close at NT$75.10, while E, Sun Financial Holding Co. increased 0.94 percent to end at NT$32.10.
In contrast, Cathay Financial Holding Co. lost 0.31 percent to close at NT$63.30.
“Judging from today’s sell-off in the electronics sector, I suspect foreign institutional investors stood on the sell side,” Su said. “Investors should continue to pay close attention to U.S. markets since their performance will dictate foreign institutional trading.”
According to the TWSE, foreign institutional investors sold a net NT$12.57 billion worth of shares on the main board Monday.
Source: Focus Taiwan News Channel