Shares in Taiwan fell Tuesday for the second straight session, dropping almost 150 points, as investors took cues from a plunge on the United States markets overnight, amid growing worry over a hawkish U.S. Federal Reserve, dealers said.
The bellwether electronics sector again led the downturn, while turnover remained thin as many investors stayed on the sidelines ahead of an expected speech by Fed Chair Jerome Powell at the central bank’s annual Jackson Hole economic symposium later this week, dealers said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 149.25 points, or 0.98 percent, at 15,095.89, after moving between 15,086.43 and 15,225.17. Turnover totaled NT$170.47 billion (US$5.64 billion).
The market opened down 0.13 percent, and selling escalated, with large-cap semiconductor stocks taking a beating, in the wake of a 2.55 percent plunge on the tech-heavy Nasdaq index and a 3.72 percent tumble on the Philadelphia Semiconductor Index in the U.S. Monday, dealers said.
The sell-off on the Taiex and the U.S. markets largely reflected growing concerns that the Fed will continue its aggressive tightening policy to tackle inflation, dealers said, citing a spike in the benchmark 10-year U.S. treasury yield to over 3 percent on Monday.
“Market sentiment at home and abroad has turned very cautious, as many investors anxiously await Powell’s speech,” said Mega International Investment Services Corp. analyst Alex Huang.
The caution has grown since St. Louis Federal Reserve President James Bullard said in an interview last Friday that he was leaning toward supporting a 75-basis point rate hike in September, according to Huang. After that statement, the Taiex dropped Monday by 163.64 points to end at 15,245.14.
“With the 10-year treasury yield soaring, investors have been dumping tech stocks,” Huang said. “In Taiwan, large-cap semiconductor stocks, no doubt, fell victim to fears over growing interest rates, which dwarfed those stocks’ dividend yields,” Huang said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, dropped 1.18 percent Tuesday to close at NT$504.00, leading a 1.10 percent fall of the electronics sector and a 1.13 percent decline of the semiconductor sub-index, he said.
“TSMC shares may soon test the nearest technical support, at around NT$500.00, amid volatility on the U.S. markets,” Huang said.
Among other semiconductor stocks, contract chipmaker United Microelectronics Corp. fell 2.51 percent to end at NT$40.80, IC packaging and testing services provider ASE Technology Holding Co. shed 2.37 percent to close at NT$86.60, and display driver IC designer Novatek Microelectronics Corp. dropped 1.88 percent to end at NT$261.00.
Bucking the downturn, smartphone IC designer MediaTek Inc. rose 0.60 percent to close at NT$676.00, and application-specific IC (ASIC) designer Alchip Technologies Ltd. gained 1.96 percent to end at NT$780.00.
Also in the electronics sector, flat panel maker AU Optronics Corp. shed 5.60 percent to close at NT$16.00, and rival Innolux Corp. lost 4.05 percent to end at NT$11.80 on weaker market demand.
“The worry over an accelerating rate hike cycle in the U.S. spread to non-tech stocks and the biotech sector, which appeared resilient initially but later fell into negative territory,” dropping 0.31 percent, Huang said.
Drug developer Sinphar Pharmaceutical Co. lost 3.64 percent to close at NT$33.10, and healthcare service provider All Cosmos Bio-Tech Holding Corp. fell 4.24 percent to end at NT$67.80, following a 10 percent gain, the maximum daily increase, by both stocks on Monday.
Elsewhere in the old economy sector, Formosa Plastics Corp. fell 1.37 percent to close at NT$93.60, and Nan Ya Plastics Corp. lost 1.13 percent to end at NT$70.10. Taiwan Cement Corp. dropped 0.76 percent to close at NT$39.35, and Asia Cement Corp. ended down 0.47 percent at NT$42.55.
In the financial sector, Fubon Financial Holding Co. shed 1.02 percent to close at NT$58.20, and Cathay Financial Holding Co. dropped 1.07 percent to end at NT$46.35.
“Today’s selling plunged the Taiex below the 20-day moving average of 15,100 points, and further losses are possible,” Huang said. “But technically speaking, I expect the main board to see strong support at around 15,000 points.”
According to the TWSE, foreign institutional investors sold a net NT$16.76 billion worth of shares on the main board Tuesday.
Source: Focus Taiwan News Channel