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Taiwan shares down nearly 6% after Wall Street plunge

2018/02/06 12:49:43

Taipei, Feb. 6 (CNA) Taiwan shares took a dive Tuesday morning as investors reacted to the Dow Jones Industrial Average's fall of more than 1,170 points overnight amid rising concerns over higher interest rates, dealers said.

Selling in Taiwan was seen across the board with large cap stocks, such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), leading the downturn, they said.

As of 12:20 p.m., the weighted index on the Taiwan Stock Exchange had fallen 636.66 points, or 5.82 percent, to 10,313,47 on abnormally high turnover of NT$192.81 billion (US$5.33 billion) following the Dow's 4.60 percent plunge on Monday in the United States.

The heavy selling pushed the market's benchmark index below its 240-day moving average of 10,386, its nearest point of technical support, dealers said.

Among the falling market heavyweights, TSMC, the most heavily weighted stock in the local market, had shed 6.92 percent to NT$235.50, with 78.57 million shares changing hands.

iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, had lost 4.12 percent to NT$88.80.

Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., had lost 10 percent, the maximum drop allowed in a single session, to NT$3,420 after reporting disappointing sales data a day earlier.

"Look at the expanded turnover. Many investors here seem to be panicking and dumping their holdings," Taishin Securities Investment Advisory analyst Tony Huang said.

"They fear more volatility on Wall Street will continue to haunt the market in Taiwan."

After the Dow's 1,700-point dive on Monday, Dow Futures were down another 400 points in after-hours trading, which boded ill for Tuesday's session in the U.S., the analyst said.

Huang said there are no signs Taiwan's market will stabilize after the steep falls Monday and Tuesday.

The Taiex fell 1.62 percent on Monday.

"Investors here wanted to keep their holdings to take advantage of a possible rally after the Lunar New Year holiday amid high liquidity, but the volatility on Wall Street has forced them to sell," Huang said.

"Right now, they're simply dumping their holdings to avoid further losses."

In addition to the bellwether electronics sector, which was down 6.14 percent, stocks in the old economy and financial sectors could not escape the heavy downward pressure. Among them, Formosa Plastics Corp. had fallen 3.58 percent to NT$96.90 and Nan Ya Plastics Corp. had lost 3.81 percent to NT$75.80 as of 12:20 p.m.

In the financial sector, which was down 4.99 percent, Cathay Financial Holding Co. had shed 6.28 percent to NT$50.70, and Fubon Financial Holding Co. had dropped 5.57 percent to NT$49.20.

"I think many local investors just followed their foreign counterparts to sell today, which boosted trading volume," Huang said.

The plunge on Wall Street was triggered by better-than-expected job data for January in the United States, which sparked fears that the U.S. Federal Reserve will raise interest rates four times this year rather than the expected three, something the markets do not want to see.

Some have even speculated that the sell-off was a message to new Fed Chairman Jerome Powell telling him that he should not be too hasty in raising interest rates.

(By Chung Jung-feng and Frances Huang)