Shares in Taiwan moved sharply lower Friday as investors reacted to plunges on U.S. markets and rushed to cut their holdings in large cap stocks, dealers said.
The bellwether electronics sector came under heavy pressure amid concerns over rising U.S. 10-year treasury yields, which made tech stocks look more expensive, and raw material stocks also fell as investors decided to pocket built-up gains, they said.
The Taiex, the Taiwan Stock Exchange’s (TWSE) benchmark weighted index, ended down 363.88 points, or 2.15 percent, at 16,570.89, after moving between 16,503.74 and 16,883.00. Turnover totaled NT$339.63 billion (US$12.18 billion).
The market opened down 0.31 percent after a 1.59 percent fall in the Dow Jones Industrial Average overnight, and continued to tumble until about the last half hour of the session, when a slight rebound occurred, dealers said.
For the week, the Taiex fell 689.30 points, or 3.99 percent, largely due to volatility on global markets.
“It was understandable that the Taiex faced headwinds on the back of the U.S. markets’ bleeding as the two markets have been highly correlated,” Cathay Future Consulting analyst Tsai Ming-han said.
“Today’s turnover surpassed the 20-day moving average of about NT$300 billion, indicating many investors engaged in panic selling.”
Tsai said the tech sector again dragged the Taiex lower because of its heavy weighting. The electronics sector lost 1.68 percent, and the semiconductor sub-index finished down 1.45 percent.
“The silver lining was that contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, came off its early low and outperformed the broader market to prevent it from falling further.”
TSMC lost 1.03 percent to close at NT$574.00, after hitting a low of NT$571.00. “The stock moved closer to its nearest technical support at NT$567.00, its 240-day moving average, which attracted bargain hunters to pick up its shares.”
Among other falling semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, fell 2.19 percent to end at NT$62.60, and integrated circuit designer MediaTek Inc. closed down 2.21 percent at NT$885.00.
Dynamic random access memory chip supplier Nanya Technology Corp. closed 2.43 percent lower at NT$64.30.
“Concerns over the adverse effects of power rationing in China continued to affect sentiment toward Taiwanese electronics component makers, in particular in the printed circuit board industry, which have production sites there,” Tsai said.
“But many of them have inventory on hand to supply to their clients, and I think the impact will be limited.”
In the PCB sector, Compeq Manufacturing Co. lost 4.69 percent to close at NT$35.55, and Nan Ya Printed Circuit Board Corp. fell 2.76 percent to end at NT$423.00. Tripod Technology Corp., however, gained 1.35 percent to close at NT$113.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., the world’s largest contract electronics maker, closed 1.90 percent lower to end at NT$103.00.
“Many raw material stocks saw heavy profit-taking today on gains posted in recent sessions. The U.S. market weakness simply gave investors a reason to cut their holdings,” Tsai said.
In the petrochemical sector, which lost 3.13 percent, Nan Ya Plastics Corp. shed 3.61 percent to close at NT$88.20, Formosa Plastics Corp. fell 3.08 percent to end at NT$110.00, Formosa Petrochemical Corp. dropped 2.42 percent to close at NT$96.80, and Formosa Chemicals & Fibre Corp. ended down 2.26 percent at NT$82.00.
The paper sector also encountered heavy selling, finishing down 3.79 percent. Cheng Loong Corp. closed 3.51 percent lower at NT$34.40, YFY Inc. finished down 3.81 percent at NT$32.85, and Chung Hwa Pulp Corp. ended down 5.13 percent at NT$24.05.
Shipping industry stocks were hit hard by a decline in freight rates on routes between the Far East and both the United States and Europe, Tsai said.
Evergreen Marine Corp., the largest container cargo shipper in Taiwan, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. all plunged 10 percent to end at NT$113.50, NT$108.00 and NT$183.50, respectively.
“After the losses this week, the Taiex has become technically weaker, with more losses possible,” Tsai said. “We have to watch closely whether tech stocks on U.S. markets will stage a rebound, which could lead their Taiwanese counterparts to bounce back.”
According to the TWSE, foreign institutional investors sold a net NT$39.65 billion in shares in Taiwan Friday.
Source: Focus Taiwan News Channel