Shares in Taiwan moved sharply lower Friday, as investors remained jittery ahead of the release of U.S. consumer price index (CPI) data later in the day.
The bellwether electronics sector led the broader market to trend lower throughout the session, with large-cap tech stocks in focus amid fears that high inflation will prompt the U.S. Federal Reserve to aggressively tighten its monetary policy.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 161.22 points, or 0.97 percent, at 16,460.12, after moving between 16,403.33 and 16,581.81. Turnover totaled NT$185.13 billion (US$6.26 billion).
The market opened down 0.24 percent, and selling soon escalated as semiconductor heavyweights, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) in particular, came under pressure in the wake of a 2.75 percent plunge on the tech-heavy Nasdaq index and a 1.94 percent tumble on the Dow Jones Industrial Average.
With the Taiex moving closer to the nearest technical support at around 16,400 points at one point, some bargain hunters jumped into the trading floor, largely picking up non-tech stocks in the petrochemical, textile, and tourism industries, to help the main board recover part of its earlier losses.
“Market sentiment was spooked by comments from the White House comments indicating it would report higher-than-expected CPI growth in May, which dashed the market’s previous forecast that the CPI growth will stay unchanged from a month earlier in May or fall slightly in May,” Cathay Futures Consultant analyst Tsai Ming-han said.
In March, the CPI growth in the U.S. hit a 40-year high of 8.5 percent before moderating to 8.3 percent in April, giving the global markets hope that inflation had peaked.
“Amid concerns over higher inflation, the U.S. markets tumbled and the Taipei market simply followed as electronics giants, especially TSMC, were spotlighted, again,” Huang said.
After a 2.80 percent decline in its American depositary receipts (ADRs) on the U.S. markets overnight, TSMC, the most heavily weighted stock in the market, lost 2.03 percent to close at NT$530.00, although the stock recovered slightly from a low of NT$529.00.
TSMC’s losses contributed about 100 points to the Taiex’s decline Friday, and led the electronics sector and the semiconductor subindex by 1.20 percent and 1.56 percent, respectively.
In the wake of a 3.24 percent drop in its ADRs Thursday, United Microelectronics Corp., a smaller contract chipmaker, lost 1.16 percent to end at NT$51.20. Smartphone IC designer MediaTek Inc. bucked the downturn, rising 0.65 percent to close at NT$930.00, while application-specific IC (ASIC) designer Alchip Technologies Ltd. also gained 1.44 percent to end at NT$847.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. shed 1.30 percent to close at NT$114.00, and fellow “Apple concept stock” Largan Precision Co., a smartphone camera lens maker, fell 1.26 percent to end at NT$1,810.00.
“While large-cap tech stocks encountered heavy pressure, buying emerged to select smaller-sized electronics component stocks and even the over-the-counter (OTC) market, indicating some investors were still willing to raise their holdings outside the large tech field for the moment,” Tsai said.
Among them, Gold Circuit Electronics Ltd., which rolls out printed circuit boards (PCBs) for servers, soared 10 percent, the maximum daily increase, to close at NT$92.90, while Unitech Printed Circuit Board Corp., products of which are for automotive electronics production, also moved higher by 3.95 percent to end at NT$18.40.
The index on the OTC market, where smaller stocks are traded, closed up 0.20 percent at 205.23.
Tsai said select old economy stocks benefited from rotational buying as their tech counterparts largely showed signs of weakness.
The tourism index ended up 0.24 percent, with the Ambassador Hotel Co. up 1.26 percent to close at NT$32.20, and Formosa International Hotels Corp. up 1.16 percent to end at NT$181.00 as investors have embraced expectations that the government will ease its border controls soon.
Elsewhere in the old economy sector, Formosa Chemicals & Fibre Corp. rose 0.12 percent to close at NT$82.50 and Taita Chemical Co. added 0.17 percent to end at NT$30.15. Tung Ho Textile Co. gained 0.56 percent to end at NT$18.10, and Makalot Industrial Co., another textile supplier, rose 0.60 percent to end at NT$167.00.
“Today’s selling showed fragile market sentiment caused by external factors,” Tsai said. “But, I expect selling will ease after the Fed concludes its two-day policymaking meeting on June 15 to remove some uncertainty,” Tsai said.
According to the TWSE, foreign institutional investors sold a net NT$18.55 billion worth of shares on the main board Friday.
Source: Focus Taiwan News Channel