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Taiwan shares plunge in mid-morning session on Wall Street losses

2018/02/05 11:40:37

CNA file photo

Taipei, Feb. 5 (CNA) Taiwan shares came under heavy pressure in the mid-morning session Monday as investors took their cue from a dive on Wall Street at the end of last week amid rising fears over higher interest rates in the U.S., dealers said.

Selling focused on large cap stocks such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and iPhone assembler Hon Hai Precision Industry Co., the top two stocks on the local market in terms of market value, pushing the broader market below the nearest technical support at 11,068 points, the 20-day moving average, when the market opened, they said.

As of 10:52 a.m., the weighted index on the Taiwan Stock Exchange had shed 232.48 points, or 2.09 percent, at 10,893.75 on turnover of NT$72.53 billion (US$2.48 billion).

"It was no surprise that local equities suffered such steep losses soon after the market opened following a fall of more than 600 points on the Dow Jones Industrial Average on Friday," MasterLink Securities analyst Tom Tang said.

The Dow posted its largest loss since June 2016, while the S&P 500 index had its biggest one-day fall since September 2016, down 2.1 percent on Friday. The Cboe Volatility index, which gauges fears in the U.S. market, rose from 11.08 to 17.31 last week.

"In particular, with other regional markets such as Tokyo and Seoul also falling more than 2 percent this morning, downward pressure on the local main board escalated with heavyweight stocks in focus," Tang said.

TSMC led the local market lower soon after the market opened, down 3.08 percent at NT$251.50 with 23.33 million shares changing hands, while Hon Hai also suffered a 2.52 percent drop, falling to NT$92.80 on trading turnover of 30.13 million shares.

The bellwether electronics sector had lost 2.52 percent, while the semiconductor sub-index had fallen 2.96 percent as of 10:52 a.m.

In addition to the high-tech sector, heavy selling was seen across the board. Among the falling stocks, Nan Ya Plastics Corp. had lost 1.63 percent to hit NT$78.50 and Formosa Chemicals & Fibre Corp. had fallen 1.40 percent to NT$105.50 as of 10:52 a.m., while Fubon Financial Holding Co. had shed 2.62 percent to reach NT$52.00 and Cathay Financial Holding Co. had lost 1.83 percent, falling to NT$53.70.

"The plunge on Wall Street reflected concerns over a rate hike by the U.S. Federal Reserve after Washington reported strong jobs data for January on Friday," Tang said.

Tang said expectations about higher interest rates in the U.S. boosted the U.S. dollar index, which tracks the currencies of Washington's six major trading partners with the greenback, so investors in the region fearing a stronger greenback will prompt foreign investors to move funds out of the region.

"The Taiwan dollar is weakening against the U.S. dollar now so local investors are worried about fund flight, the last thing the equity market wants," Tang said, adding he suspected selling in large cap stocks largely came from foreign institutional investors.

"How the local main board moves will depend on the performance of Wall Street," Tang said.

(By Chang Liang-chih and Frances Huang)