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Taiwan shares tumble on pessimism over U.S.-China trade talks

2019/10/09 17:27:18

Taipei, Oct. 9 (CNA) Shares in Taiwan moved down more than 1 percent Wednesday as investors got jittery over the high-level trade talks taking place between the United States and China in the coming days, dealers said.

Investors in Taiwan reacted to a fall in U.S. markets overnight, which came after hopes for a positive outcome from the trade negotiations suffered a blow when the U.S. expanded its trade blacklist Tuesday to include some Chinese tech firms, they said.

The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended down 127.35 points, or 1.16 percent, at the day's low of 10,889.96, off an early high of NT$10,989.39. Turnover was NT$129 billion (US$4.18 billion).

The market opened down 0.37 percent to fall below 11,000 points after the Dow Jones Industrial Average closed down 1.19 percent and the S&P 500 index ended 1.56 percent lower overnight in reaction to the move to expand the trade blacklist, dealers said.

Washington announced Tuesday that an additional 28 Chinese companies, including video surveillance product supplier Hangzhou Hikvision Digital Technology Co., were added to its entity list to restrict their ability to do business with U.S. companies.

The move was aimed at punishing Beijing for its reportedly abusive treatment of predominantly Muslim ethnic minorities.

Selling on the local market then accelerated in the morning, and the downbeat mood continued to the end of the session as the Taiex closed at the day's low, dealers said.

"The expanding of the blacklist came right before the trade talks were to open Thursday, and it dampened expectations for the negotiations," Mega International Investment Services Corp. analyst Alex Huang said.

"It was no surprise that U.S. stock markets felt the pinch overnight and that regional markets, including Taiwan, just followed suit today," Huang said.

"There have been fears that Beijing will retaliate, and that could affect the already fragile global economy."

Huang said the bellwether electronics sector was hit particularly hard by Wednesday's sell-off.

Selling was focused on large cap stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which had led the broader market in overcoming technical resistance ahead of the 11,000-point barrier on Tuesday.

TSMC fell 1.57 percent to close at the day's low of NT$282.00 Wednesday after a 3.06 percent increase Tuesday.

"Compared with yesterday's gains, TSMC seemed resilient today since many investors were still upbeat about the company's global competitive edge in high-end technology development," Huang said.

"The stock could see some technical support around a range of between NT$276.00 and NT$280.00 in the short term."

TSMC's fall contributed to electronics shares as a whole tumbling 1.47 percent and the semiconductor sub-index finishing 1.81 percent lower.

Among the falling semiconductor stocks, integrated circuit packaging and testing services provider ASE Technology Holding Co. lost 2.16 percent to close at NT$72.40.

Memory chipmaker Nanya Technology Corp. shed 9.16 percent to close at NT$71.40 after it reported Tuesday a more than 19 percent fall in net profit in the third quarter from a quarter earlier.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. lost 1.49 percent to close at NT$72.90, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., closed 0.45 percent lower at NT$4,460.00.

"I think foreign institutional investors shifted to the sell side today after the Dow Jones fall overnight," Huang said.

After the market close, the TWSE announced foreign institutional investors sold a net NT$7.25 billion in shares Wednesday after a net buy of NT$10.15 billion Tuesday.

Downward pressure was also seen among old economy heavyweights. Formosa Plastics Corp. closed 1.27 percent lower at NT$93.10, Formosa Petrochemical Corp. fell 1.33 percent to end at NT$96.10, and food brand Uni-President Enterprises Corp. ended 1.37 percent lower at NT$72.00.

Due to its relatively low valuation, Huang said, the financial sector appeared resilient compared to the rest of the market, falling only 0.65 percent. Cathay Financial Holding Co. outperformed the market, rising 0.12 percent to end at NT$40.55.

Wednesday's selling pushed the Taiex 20-day moving average below 10,891 points, indicating the market has turned technically weaker, Huang said.

"If the Washington-Beijing trade talks disappoint global markets, Taiwan will see further losses down the road after trading resumes Monday," Huang said.

Markets in Taiwan will be closed Thursday and Friday for the extended four-day National Day holiday that starts Oct. 10.

(By Frances Huang)
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