Shares in Taiwan came under heavy pressure Friday after American markets fell overnight because of the crisis in Ukraine and concerns over an interest rate hike by the Federal Reserve, dealers said.
The bellwether electronics sector was hit hard by a plunge in tech stocks in the United States, and selling in financial stocks pushed the broader market down further, but select raw material stocks appeared resilient, they said.
The Taiex, the Taiwan Stock Exchange’s benchmark index, ended down 197.88 points, or 1.10 percent, at 17,736.52 after moving between 17,710.54 and 17,845.01. Turnover was NT$387.78 billion (US$13.8 billion).
The market opened down 0.50 percent and selling soon escalated after a 1.56 percent decline in the tech-heavy Nasdaq index and a 2.24 percent drop in the Philadelphia Semiconductor Index led investors here to dump large cap electronics stocks, dealers said.
Ukraine, U.S. Fed’s next move
“The local market was dictated by U.S. markets today as the war in Ukraine continued to hurt market sentiment,” Cathay Futures Consulting analyst Tsai Ming-han (???) said.
“More importantly, with the Fed’s next policymaking meeting coming on March 15, many investors are wondering what it will do to take on inflation,” Tsai said.
Fed Chair Jerome Powell said in testimony to the Senate Banking Committee that he was inclined toward a 25-basis point hike in March but was open to more aggressive moves down the line.
Because of Powell’s testimony, “U.S. markets remained volatile as investors continued to dump tech stocks that had relatively high valuations. The same pattern dominated trading in Taiwan today,” Tsai said.
TSMC
Tsai said contract chipmaker Taiwan Semiconductor Co. (TSMC), the most heavily weighted stock in the local market, fell victim to such selling throughout the session.
TSMC lost 1.16 percent to close at NT$595.00, ending below NT$600 for the first time since Dec. 21, 2021, when TSMC shares closed at NT$597.00. Led by TSMC, the electronics sector lost 1.24 percent, and the semiconductor sub-index fell 1.62 percent.
“It is hard to say where TSMC will see technical support as long as tech stocks on U.S. markets continue to be punished amid geopolitical concerns and worries over the Fed’s tightening,” Tsai said.
Among other semiconductor stocks, United Microelectronics Corp. (UMC), a smaller contract chipmaker, fell 1.48 percent to close at NT$53.40, and smartphone chip designer MediaTek Inc. lost 5.09 percent to end at NT$1.025.00.
Power management IC designer Silergy Corp. also dropped 5.13 percent to close at NT$3,700.00, but application-specific IC (ASIC) designer Alchip Technologies Ltd. gained 2.52 percent to end at NT$1,220.00.
Elsewhere in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 0.48 percent to close at NT$105.00, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., closed 0.74 percent lower at NT$2,025.00.
Old economy stocks
“When the tech sector suffers losses, buying tends to rotate to old economy stocks. Today, select raw material and shipping stocks benefited,” Tsai said.
Among steel stocks, Chun Yu Works & Co. rose 2.84 percent to close at NT$32.60 and Tung Ho Steel Enterprise Corp. finished 2.82 percent higher at NT$73.00.
China Steel Corp., the largest steel maker in Taiwan, lost 0.52 percent to end at NT$38.40 but still outperformed the broader market. First Copper Technology Co., meanwhile, surged 8.40 percent to end at NT$51.00.
In the transportation sector, which rose 0.51 percent, container cargo shipper Yang Ming Marine Transport Corp. gained 6.40 percent to close at NT$133.00, while Wan Hai Lines Ltd. ended unchanged at NT$192.00, and Evergreen Marine Corp. lost 0.93 percent to close at NT$159.00.
Financials
The financial sector also took a beating, ending down 1.26 percent.
Among the falling financial stocks, Cathay Financial Holding Co. lost 1.45 percent to end at NT$61.20, Fubon Financial Holding Co. fell 1.59 percent to close at NT$74.40, and CTBC Financial Holding Co. shed 2.15 percent to end at NT$27.35.
“Before the Fed’s next meeting, I expect tech stocks to continue to appear weak and the Taiex to likely see stiff pressure ahead of the 60-day moving average of around 18,000 points,” Tsai said.
According to the TWSE, foreign institutional investors sold a net NT$43.03 billion in shares on the market Friday.
Source: Focus Taiwan News Channel