Shares in Taiwan continued to plummet Tuesday amid growing concerns that sanctions by the United States and its allies on energy imports from Russia will pump up inflation worldwide, dealers said.
Following a plunge in U.S. markets overnight, investors in Taiwan rushed to cut their holdings across the board, starting with large cap semiconductor stocks, dealers said.
The Taiex, the Taiwan Stock Exchange’s benchmark weighted index, ended down 353.44 points, or 2.06 percent, at 16,825.25, after moving between 16,764.78 and 17,113.67. Turnover totaled NT$443.47 billion (US$15.67 billion).
The market opened down 1.04 percent after a 2.37 percent fall in the Dow Jones Industrial Average, a 3.62 percent dive in the tech-heavy Nasdaq index, and a 4.91 percent slide in the Philadelphia Semiconductor Index overnight, triggered by events in Ukraine and inflation worries.
Ukraine, inflation worries
“Geopolitical tensions from Russia’s invasion of Ukraine have been turned into an economic issue because of a spike in crude oil prices caused by possible energy import sanctions against Moscow,” Mega International Investment Services Corp. analyst Alex Huang said.
Overnight, West Texas Intermediate crude futures in New York soared 3.22 percent, while Brent futures in London, the global benchmark, surged 4.3 percent.
Since the beginning of this week, the Taiex has lost 911.27 points, or 5.14 percent, as oil prices have skyrocketed.
“The higher crude prices are pushing up inflationary pressures, leading investors at home and abroad to increasingly believe that the U.S. Federal Reserve will take more aggressive action to rein in inflation,” Huang said.
“That’s why a sell-off was seen around the world.”
Bearish sentiment around semiconductor stocks
Judging from recent heavy losses on the Philadelphia Semiconductor Index, Huang said semiconductor stocks in the U.S. seem to have entered a bear market, dragging Taiwanese semiconductor stocks down.
“Market attention still focused on TSMC (Taiwan Semiconductor Manufacturing Co.), one of the liquid tech heavyweights, as investors rushed to cut their holdings amid the bearish sentiment,” Huang said.
After a 5.49 percent decline in its American depositary receipts (ADRs) Monday, TSMC, the most heavily weighted stock in the local market, lost 2.26 percent to close at NT$563.00 in Taipei on Tuesday.
Led by TSMC, the electronics sector lost 1.96 percent, and the semiconductor sub-index closed down 2.28 percent.
Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, shed 3.68 percent to end at NT$49.70 after its ADRs lost 4.76 percent overnight.
Power management IC designer Silergy Corp. lost 5.10 percent to close at NT$3,255.00, and application-specific IC (ASIC) designer Alchip Technologies Ltd. fell 6.36 percent to end at NT$1,030.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. lost 0.98 percent to close at NT$101.50.
Flat panel makers AU Optronics Corp. and rival Innolux Corp. bucked the downturn, however, closing 2.42 percent and 1.80 percent higher, respectively, at NT$21.20 and NT$16.95 on reports that Samsung Electronics Corp. will close its LCD operations in June.
Raw material stocks
“In addition to the tech weakness, what also worried me was that raw material stocks, in particular in the steel industry, also turned weaker, unable to sustain their recent strength, making the broader market more technically fragile,” Huang said.
After rising 1.01 percent Monday, the steel industry lost 4.49 percent Tuesday. Among the major falling stocks, China Steel Corp., the largest steel maker in Taiwan, lost 4.10 percent to close at NT$37.40.
Tung Ho Steel Enterprise fell 5.08 percent to end at NT$69.20, and Chung Hung Steel Corp. closed 6.83 percent lower at NT$40.90. In addition, First Copper Technology Co. plunged 10 percent, the maximum daily decline, to end at NT$47.45.
Elsewhere, textile brand Far Eastern New Century Corp. closed unchanged at NT$29.50, while Taiwan Cement Corp. lost 0.32 percent to end at NT$46.95, and food vendor Uni-President Enterprises Corp. dropped 1.21 percent to close at NT$65.40.
“Volatility on U.S. markets is likely to continue, so the Taiex could see more selling down the road,” Huang said. “The next strong technical support will not be seen until the index moves closer to 16,162 points, an intraday low on Oct. 5, 2021.”
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$46.12 billion in shares on the market Tuesday and accounted for 57.3 percent of total turnover.
Source: Focus Taiwan News Channel