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Taiwan shares plunge over 100 points

2019/03/25 12:06:30

Taipei, March 25 (CNA) Taiwan shares came under heavy pressure Monday morning, diving more than 100 points as investors took cues from a drop on Wall Street on Friday amid rising concerns over the global economy, dealers said.

The downturn in Taipei was led by large cap stocks, in particular in the bellwether electronics sector, with contract chipmaker Taiwan Semiconductor Manufacturing Co. falling more than 2 percent, dealers said.

As of 11:21 a.m. the weighted index on the Taiwan Stock Exchange (Taiex) had fallen 151.32 points, or 1.42 percent, to 10,487.75 on turnover of NT$63.08 billion (US$2.05 billion).

Soon after the local equity market opened, the Taiex fell sharply in the wake of the heavy losses on the U.S. markets, where the Dow Jones Industrial Average suffered its steepest fall this year, dropping about 460 points, or 1.77 percent, and the tech-heavy Nasdaq index shed 2.50 percent, dealers said.

"The steep downturn on the U.S. markets reflected increasing worry over the global economy as investors saw an inverted yield curve on Friday," MasterLink Securities analyst Tom Tang said.

It was the first time since 2007 that the market saw an inverted yield curve, which occurs when short-term rates top longer-term rates, an indicator of an economic recession.

"In addition, a super dovish Federal Reserve prompted many investors around the world to think that the U.S. economy, the world's largest, is weakening," Tang said, referring to the Fed's recent hint that it would not to raise interest rates for the rest of the year.

"Markets in the region fell this morning and Taiwan was no exception as selling emerged in heavyweights such as TSMC," Tang said.

In the bellwether electronics sector, TSMC, the most heavily weighted stock on the local market, had dropped 2.41 percent to NT$242.50, with 9.63 million shares changing hands, as of 11:21 a.m. TSMC's losses pushed down the main board by about 60 points.

Among other falling tech stocks, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., was down 3.54 percent at NT$4,500.00, and iPhone assembler Hon Hai Precision Industry Co. had dropped 2.33 percent to NT$71.30.

The selling also spread to non-tech stocks, sending the Taiex even lower, as market sentiment was affected by volatility in the global market, Tang said.

In the old economy sector, Formosa Petrochemical Corp. had fallen 0.87 to NT$114.50, Formosa Plastics Corp. had dropped 0.93 percent to NT$106.50, and Eclat Textile Co. was down 1.74 percent at NT$423.00 as of 11:21 a.m.

However, Taiwan Cement Corp. appeared resilient, rising 4.65 percent to NT$40.50 on the back of improved profitability.

The financial sector was also under pressure, with Fubon Financial Holding Co. down 1.51 percent at NT$45.70, and Cathay Financial Holding Co. falling 1.62 percent to NT$45.45.

"It still needs some time to observe how the global economy will evolve, Tang said. "I do not think a one-day inverted yield curve in the U.S. market is sufficient evidence."

He said the losses Monday were likely due to investors seizing on external factors to lock in their recent gains.

"The Taiex's nearest technical support is expected to be around 10,400 points," he said.

(By Chung Jung-feng and Frances Huang)