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Taiwan stock market plunges after Taiwan dollar slide

2018/04/17 13:18:09

Taipei, April 17 (CNA) Taiwan shares took a beating Tuesday morning, falling more than a percent as heavy losses suffered by the Taiwan dollar a day earlier led investors to dump their holdings amid worries over a possible foreign fund flight, dealers said.

Selling focused on large cap stocks, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), as investors feared market heavyweights are more likely to feel the pinch of a sell-off by foreign institutional investors, they said.

As of 12:35 p.m., the weighted index on the Taiwan Stock Exchange, the Taiex, had fallen 133.94 points or 1.22 percent to 10,820.61 on turnover of NT$116.17 billion (US$3.95 billion).

TSMC, the most heavily weighted stock in the local market, was down 2.05 percent at NT$238.50, with 27.86 million shares changing hands. Led by TSMC, the bellwether electronics sector was down 1.34 percent and the semiconductor sub-index was 1.84 percent lower.

TSMC's losses translated into a decline of about 50 points on the broader market.

"Investors were shocked by the sharp decline of the Taiwan dollar against the U.S. dollar yesterday," MasterLink Securities analyst Tom Tang said.

"In particular, the two major business dailies (the Economic Daily News and the Commercial Times) put the Taiwan dollar's depreciation on their front pages, deepening worries over the further flight of foreign funds.

"The Taiwan dollar staged a slightly rebound today. But that has not made investors feel comfortable," Tang said.

On Monday, the U.S. dollar rose NT$0.123 to NT$29.425 against the Taiwan dollar, its highest closing rate since Jan. 22, when the greenback ended at NT$29.432.

The U.S. dollar retreated slightly Tuesday morning, and was down NT$0.036 at NT$29.389 against the Taiwan dollar at around noon.

Dealers attributed the sharp depreciation of the Taiwan dollar on Monday to several factors, including a possible acceleration of the U.S. Federal Reserve's interest rate hikes this year and a live-fire military exercise planned by China's People's Liberation Army in the Taiwan Strait for Wednesday.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, was down 1.14 percent at NT$86.60 and flat panel maker Innolux Corp. had dropped 3.75 percent to NT$11.50 as of 12:35 p.m.

Tang said the financial sector also witnessed heavy losses. Among the falling financial stocks, Fubon Financial Holding Co. had lost 1.28 percent to NT$49.95 and the Cathay Financial Holding Co. had shed 1.33 percent to NT$51.80.

"Foreign institutional investors have stood on the sell side since the beginning of this year," Tang said. "Their next move on local stocks will be closely monitored by local investors."

Between Jan. 1 and April 16, foreign institutional investors registered a net sell of about NT$90 billion in Taiwan's stock market.

(By Frances Huang)
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