Shares in Taiwan tumbled almost 190 points Friday as market sentiment turned cautious before the release of U.S. September jobs data later in the day, which is set to provide more clues as to how the Federal Reserve will continue to implement its rate hike cycle policy, dealers said.
With a couple of Fed officials making hawkish remarks regarding the American central bank’s stance on tightening overnight, selling focused on large-cap tech stocks on the local main board, in particular in the semiconductor industry amid fears over an increase in fund flight caused by a stronger U.S. dollar, dealers added.
In addition, lower-than-expected revenue reported by U.S.-based IC design house Advanced Micro Devices (AMD) for the third quarter of 2022 added more downward pressure on the local semiconductor industry, dealers said.
The Taiex, the weighted index on the local market, ended down 189.77 points, or 1.37 percent, at 13,702.28 after moving between 13,684.21 and 13,847.52. Turnover totaled NT$161.04 billion (US$5.09 billion).
The market opened down 0.32 percent in the wake of a 1.15 percent drop on the Dow Jones Industrial Average and a 0.68 percent fall on the tech-heavy Nasdaq index on Thursday, as investors anxiously wait for the U.S. September non-farm payroll data, dealers said.
Selling escalated and continued into the end of the session with the bellwether electronics sector in focus after fears the Fed will continue to aggressively raise its key interest rates to fight inflation boosted treasury yields, which has made tech stocks less attractive compared with their dividend yields, dealers added.
The electronics sector lost 1.89 percent with the semiconductor sub-index falling 2.66 percent at the end of the session on Friday.
The U.S. factors
“The U.S. September jobs data is being closely watched by global markets because if the numbers beat expectations, the Fed is likely to maintain its hawkish policy,” Hua Nan Securities analyst Kevin Su said.
“Moreover, Fed officials remain aggressive over the rate hike policy, which scared many investors away,” Su said, referring to Minneapolis Fed President Neel Kashkari and Cleveland Fed President Loretta Mester, who said the U.S. has been in an “unacceptably high” inflation environment. In August, the U.S. consumer price index fell from July’s 8.5 percent to 8.3 percent, which was well above the 2 percent alert.
“A stronger U.S. dollar continued to lead foreign institutional investors to move more of their funds out of the country after they further cut their holdings in liquid semiconductor heavyweights throughout the session,” Su said.
Chipmakers, other tech stocks
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) lost 2.88 percent to close at NT$438.00 and its losses contributed about 110 points to the Taiex’s decline.
- TSMC Q3 sales smash quarterly records, beat forecast
According to the TWSE, foreign institutional investors sold a net NT$9.28 billion worth of shares on the main board Friday, when the U.S. dollar rose NT$0.138 to close at NT$31.668 against the Taiwan dollar.
Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, fell 2.31 percent to end at NT$38.05 and smartphone IC designer MediaTek Inc. shed 3.58 percent to close at NT$566.00, while IC packaging and testing services provider ASE Technology Holding Co. was more resilient, falling 0.99 percent to end at NT$82.00.
“The local semiconductor industry came under pressure after the disappointing AMD sales report for the third quarter,” Su said.
According to AMD, the shortfall in its third quarter sales came after a “weaker than expected PC market and significant inventory correction actions across the PC supply chain.”
Also in the electronics sector, shares in Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc. bucked the downturn, rising 0.54 percent to close at NT$1,845.00, and iPhone assembler Hon Hai Precision Industry Co. ended unchanged at NT$107.50 after their strong September sales figures.
“When the tech sector faced headwinds, investors rushed to move their funds into tourism stocks today for hedging, a reflection of Taiwan’s plan to reopen its borders to foreign visitors on Oct. 13 with no quarantine required on arrival,” Su said.
- Largan September sales hit 22-month high on iPhone 14 launch
- Hon Hai September sales hit record monthly high
Outside tech stocks
Among gaining tourism stocks, Leofoo Development Co., a hotel chain operator, soared 5.76 percent to close at NT$17.45, and FarGlory Hotel Co. rose 1.47 percent to end at NT$34.60. In addition, Lion Travel Service Co. added 0.62 percent to close at NT$96.80 and Phoenix Tours International, Inc. gained 1.21 percent to end at NT$58.60.
Su said optimism over the border reopening also lifted airline stocks with China Airlines up 1.24 percent to close at NT$20.35 and EVA Airways up 1.92 percent to end at NT$29.15.
However, elsewhere in the old economy sector Formosa Plastics Corp. lost 1.16 percent to close at NT$85.10, and Nan Ya Plastics Corp. fell 0.89 percent to end at NT$67.00. In addition, China Steel Corp., the largest steel maker in Taiwan, dropped 0.90 percent to close at NT$27.55, while Tung Ho Steel Enterprise Corp. rose 0.19 percent to end at NT$54.10.
“The Dow remains unstable amid Fed concerns and further volatility is possible so the Taiex is likely to see more losses, in particular TSMC is haunted by global demand worries after AMD’s sales report,” Su said, indicating TSMC could see the nearest technical support ahead of NT$400.00 in the near term.
Source: Focus Taiwan News Channel