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Taiwan shares dive below 10,500 points amid economy concerns

2019/03/25 17:16:31

Taipei, March 25 (CNA) Shares in Taiwan took a beating Monday to close below the 10,500-point mark as market sentiment was hit by heavy losses on U.S. markets amid rising worries about the global economy, dealers said.

Selling focused on the bellwether electronics sector as investors locked in recent gains by seizing on the downturn suffered by U.S. tech stocks, while the financial sector also faced a steep decline, which pushed down the broader market, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE) or Taiex, ended down 159.59 points, or 1.50 percent, at 10,479.48, after moving between 10,485.79 and 10,535.12, on turnover of NT$107.71 billion (US$3.49 billion).

The market opened down 0.98 percent as investors were motivated by a plunge on the U.S. markets, where the Dow Jones Industrial Average closed down about 460 points, or 1.77 percent, and the tech-heavy Nasdaq index ended down 2.50 percent, as concerns over the global economy ran deeper, the dealers said.

Fears over the world's economy were raised by an inverted yield curve, which occurs as short-term rates surpass long- term ones in the U.S. market, serving as an indicator of the weakness of the U.S. economy, the world's largest.

Downward pressure on the local main board escalated to push down the Taiex below 10,500 points by the end of the session, with large-cap stocks in the bellwether electronics sector, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), suffering a steep decline to echo losses incurred by tech stocks in the U.S., the dealers said.

"The inverted yield curve came after the U.S. Federal Reserve adopted a very dovish attitude in the latest policymaking meeting held last week," Mega International Investment Services Corp. analyst Alex Huang said.

After the meeting, the Fed hinted that it would not raise its key interest rates for the rest of this year. Huang said the attitude held by the Fed seems to point to a weakening U.S. economy.

"So investors at home and abroad simply used the concerns as an excuse to cut their holdings," Huang said.

Huang said that judging from the losses suffered by market heavyweights, he suspected that foreign institutional investors stood on the sell side. According to the TWSE, foreign institutional investors sold a net NT$4.10 billion-worth of shares on the main board Monday.

TSMC, the most heavily weighted stock in the local market, led the broader market to move lower throughout the session, down 2.82 percent to close at NT$241.50, with 19.13 million shares changing hands. TSMC's losses dragged down the Taiex by about 70 points, and the electronics sector by 2.10 percent.

"Foreign institutional investors bought into TSMC aggressively in recent sessions to prop up the broader market and it was no surprise that the stock became the main victim, as investors cut their holdings to pocket profits," Huang said.

Also in the electronics sector, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., shed 3.64 percent to end at NT$4,495.00 and iPhone assembler Hon Hai Precision Industry Co. lost 2.47 percent to close at NT$71.20.

Selling was seen among big financial stocks throughout the session, with CTBC Financial Holding Co. down 1.44 percent to end at NT$20.60, Cathay Financial Holding Co. down 1.73 percent to close at NT$45.40, and Fubon Financial Holding Co. down 1.83 percent to end at NT$45.55.

Bucking the downturn on the broader market, food brand Uni-President Enterprises Corp. gained 0.41 percent to close at NT$74.20 on relatively low valuation, and Taiwan Cement Corp. gained 4.65 percent to end at NT$40.50, as it posted the highest-ever earnings per share of NT$4.37 in 2018.

"Today's turnover was moderate, indicating that selling pressure was not intolerable," Huang said. "But we still need to watch how the global financial market will move at a time of weakening market sentiment for more clues about the Taiex."

(By Frances Huang)
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