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Taiwan shares dive after Wall Street losses

2018/01/30 17:39:51

Taipei, Jan. 30 (CNA) Shares in Taiwan took a beating, falling more than 140 points on Tuesday, after a plunge on Wall Street overnight amid renewed concerns over a possible interest rate hike in the U.S., dealers said.

Selling of large cap stocks, particularly in contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), pushed down the broader market sharply, dragging the weighted index below the nearest technical support at the 10-day moving average of 11,147 points, they said.

Market sentiment has turned cautious about possible fund outflows from the country as the Taiwan dollar showed signs of weakness with foreign investors moving funds elsewhere, they added.

The weighted index on the Taiwan Stock Exchange closed down 145.03 points, or 1.29 percent, at the day's low of 11,076.78, off an early high of 11,189.57, on turnover of NT$137.38 billion (US$4.7 billion).

The market opened down 0.30 percent with selling sparked by a lower Wall Street, where the Dow Jones Industrial Average closed down 177.23 points or 0.67 percent overnight amid fears over an interest rate hike ahead of a policymaking meeting scheduled by the U.S. Federal Reserve from Tuesday to Wednesday, dealers said.

Downward pressure on the main board escalated in the afternoon session with selling spreading from TSMC to other market heavyweights across the board, pushing down the weighted index to the day's low at close of trading, they said.

"While many investors expect the Fed to leave its key interest rates unchanged this time, a spike in the 10-year treasury yield has made them wary and prompted them to think of an increase in interest rates in the future," said Ta Ching Securities analyst Andy Hsu.

"After recent significant gains posted on the main board, investors looked to seize on any negative factor as an excuse to cut their holdings," Hsu said. "Today, TSMC and other large cap stocks were the victims of such a mentality."

TSMC, the world's largest contract chipmaker and the most heavily weighted stock on the local market, fell 2.13 percent to close at NT$253.00 with 36.84 million shares changing hands.

Led by TSMC, the bellwether electronics sector ended down 1.42 percent, and the semiconductor sub-index closed down 1.82 percent.

Selling was also seen among other tech giants with shares in iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, down 1.16 percent to end at NT$93.60, and integrated circuit designer MediaTek Inc. down 2.92 percent to close at NT$299.00.

Bucking the downturn on the broader market, shares in Largan Precision Co., a smartphone camera lens supplier to Apple Inc., rose 0.50 percent to end at NT$4,055.00 on continued bargain hunting, and HTC Corp. added 1.71 percent to close at NT$71.40 after completing a deal to sell part of its smartphone assets to Google Inc. for US$1.1 billion.

The old economy sector was also hit hard with petrochemical stocks a focus. Among the falling stocks, Nan Ya Plastics Corp. fell 1.22 percent to close at NT$81.00, Formosa Plastics Corp. lost 1.44 percent to end at NT$103.00 and Formosa Chemicals & Fibre Corp. shed 4.37 percent to close at NT$109.50 after a fall in crude oil prices.

"Investors have to watch closely how the Taiwan dollar goes after it started losing ground against the U.S. dollar on fund outflows in recent sessions," Hsu said. "If fund outflows continue, depleted liquidity could affect share prices further."

According to the TWSE, foreign institutional investors sold a net NT$2.65 billion worth of shares on the main board Tuesday.

(By Frances Huang)