Shares in Taiwan extended their weakness from a session earlier to fall more than 120 points Friday as market sentiment was hurt by lingering concerns over the potential for ongoing interest rate hikes in the United States, dealers said.
The bellwether electronics sector led the downturn, with the sell-off focusing on large cap semiconductor stocks, while shipping stocks also came under pressure to push the broader market down further, dealers said.
The Taiex, the Taiwan Stock Exchange’s benchmark weighted index, ended down 128.82 points, or 0.87 percent, at the day’s low of 14,673.04 after reaching a high of 14,817.40. Turnover totaled NT$231.11 billion (US$7.56 billion).
“Yesterday’s sell-off sent the Taiex below the 15,000-point level, leaving the market technically fragile,” Hua Nan Securities analyst Kevin Su said.
Hawkish U.S. Fed
“As worries over a hawkish U.S. Federal Reserve continued to result in volatility on global markets, it was no surprise that the market here failed to bounce back from Thursday’s heavy losses,” Su said.
Fed Chair Jerome Powell raised investor concerns when he said in a speech on Aug. 26 that the Fed would continue increasing interest rates until it was confident it had completed the job of dampening inflation, Su said.
Those worries have only grown as several Fed officials have used similarly aggressive tones since then, sending the benchmark 10-year U.S. Treasury yield to 3.26 percent at one point Thursday, the highest level since June 22, Su said.
“That’s why liquid semiconductor heavyweights, and especially TSMC, keep losing steam,” Su said, referring to the world’s biggest contract chipmaker Taiwan Semiconductor Manufacturing Co.
TSMC
“The stock’s weakness came after a decision by the U.S. government to restrict artificial intelligence chip sales by Nvidia Corp. and Advanced Micro Devices (AMD) Inc. to China and Russia.”
TSMC, the most heavily weighted stock in the local market, lost 1.12 percent to close at the day’s low of NT$485.00. Led by TSMC, the electronics sector and semiconductor sub-index ended at their lows for the day, down 0.79 percent and 1.15 percent, respectively.
Among other semiconductor stocks, smartphone IC designer MediaTek Inc. shed 4.32 percent to end at NT$620.00 amid concerns over weakening demand for smartphones, and IC packaging and testing services provider ASE Technology Holding Co. lost 1.43 percent to close at NT$82.70.
Bucking the downturn, contract chipmaker United Microelectronics Corp. closed 0.12 percent higher at NT$40.50, and application-specific IC (ASIC) designer Alchip Technologies Ltd. soared 8.19 percent to close at NT$925.00, helped by steady income from patent licensing.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. ended unchanged at NT$107.50 after the company said a COVID-19 lockdown in Chengdu in China’s Sichuan province has not affected its operations there.
Buying rotated to Internet communication device suppliers in the tech sector, with CyberTAN Technology Inc. rising 4.10 percent to close at NT$30.50, and Microelectronics Technology Inc. growing 3.97 percent to end at NT$52.40.
Shipping, biotech firms
“Shipping stocks also contributed heavily to today’s losses as an Asian brokerage cut its target price for Evergreen Marine Corp. by more than half,” Su said.
Evergreen Marine, the largest container cargo shipper in Taiwan, plunged 7.54 percent to close at NT$79.70 after its target price was lowered to NT$90 from NT$215 by the brokerage, which also forecast the shipper’s earnings per share for 2023 to fall to NT$10.27, down from an expected NT$58.50 in 2022.
Rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. also shed 7.42 percent and 6.81 percent, respectively, to end at NT$71.10 and NT$78.00.
The biotech sector outperformed the broader market, however, rising 2.22 percent in the wake of recent gains by biotech stocks overseas, Su said.
Among the gainers were test kit supplier Panion & BF Biotech Inc., which soared 8.00 percent to close at NT$162.00, and medical equipment brand Maxigen Biotech Inc., which closed 5.84 percent higher at NT$48.95.
“Due to the Fed’s rate hike cycle, foreign institutional investors stayed on the sell side, which created more downside risks on the market,” Su said. “Investors here should closely look at the U.S. job data due later in the day, which could dictate the Fed’s attitude.”
According to the TWSE, foreign institutional investors sold a net NT$14.63 billion in shares Friday after a net sell of NT$33.23 billion on Thursday.
Source: Focus Taiwan News Channel