Taiwan shares drop amid worry over power rationing in China

Taipei, Sept. 28 (CNA) Shares in Taiwan came under pressure Tuesday, as market sentiment was affected the recent power rationing in some Chinese provinces where Taiwan companies have factories, dealers said.

The bellwether electronics sector led the downturn, amid worry that production at tech factories in China will be compromised by the power curbs, but petrochemical stocks bucked the downturn, following a spike in international crude oil prices overnight, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 132.33 points, or 0.76 percent, at 17,181.44, after moving between 17,113.47 and 17,286.89. Turnover totaled NT$255.19 billion (US$9.2 billion).

The market opened down 0.16 percent, as investors locked in their gains from the previous session when the Taiex rose 0.31 percent, but selling escalated in the tech sector due to the concerns over production at factories in China, dealers said.

Leading the fall on the broader market, the electronics sector fell 1.10 percent, with the semiconductor sub-index down 1.22 percent.

On Monday, selling focused on electronics component stocks, in particular those in the printed circuit board industry that have large production sites in China, Concord Securities analyst Kerry Huang noted.

"Today, the pressure spread to semiconductor stocks due to the China power situation," he said.

Among the falling semiconductor stocks, integrated circuit packaging and testing services provider ASE Technology Holding Co. shed 2.60 percent to close at NT$112.50.

The company said it was shipping products from its Kunshan plant in China's Jiangsu province ahead of schedule, and the power rationing was unlikely to affect its clients.

The power rationing was imposed earlier this month in more than 10 Chinese provinces, including production hubs such as Guangdong, Jiangsu and Zhejiang, and the supply of coal has also been reduced, as China seeks to enforce environmental regulations.

"The issue has been haunting market sentiment, as many investors here are also worried that it would hurt China's economic growth," Huang said. "In addition, the domestic electronics industry, which sells many of its products to China, is concerned about demand."

In the semiconductor sector, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, fell 1.33 percent to end at NT$594.00.

United Microelectronics Corp., a smaller contract chipmaker, dropped 1.51 percent to close at NT$65.30, while Novatek Microelectronics Corp., which supplies drive ICs for flat panels, closed down 2.42 percent at NT$424.00.

PCB stocks continued to be affected by the power rationing issue, with Tripod Technology Corp. closing down 1.71 percent at NT$115.00, and Compeq Manufacturing Co. falling 1.57 percent to end at NT$37.60.

"Fortunately, select old economy stocks benefited from rotational buying, preventing the broader market from falling further," Huang said.

The petrochemical sector rose 1.26 percent, as buying was triggered by an increase in crude prices Monday.

Among the major petrochemical stocks, Formosa Plastics Corp. rose 2.24 percent to close at NT$114.00, and Formosa Petrochemical Corp. surged 3.21 percent to end at NT$99.70.

Second tier petrochemical stocks also gained, with polyethylene resins provider USI Corp. closing up 3.78 percent at NT$41.20 and Grand Pacific Petrochemical Corp. ending 2.14 percent higher at NT$31.00.

Huang said eased concerns over an earlier outbreak of COVID-19 in Taiwan prompted investors to pick up stocks linked to domestic demand.

Among them, Formosa International Hotels Corp. rose 1.73 percent to close at NT$147.00, 85℃ café chain owner Gourmet Master Co. gained 5.32 percent to end at NT$148.50, and restaurant chain operator Wowprime Co. added 5.76 percent to close at NT$156.00.

"Undoubtedly, we have to watch closely how the power rationing situation in China evolves," Huang said. "More importantly, we have to pay close attention to turnover, as an increase will help large-cap stocks to make a breakthrough if there's a technical rebound."

If turnover does not expand, the Taiex will be unlikely to break through the 17,300 point mark, he said.

According to the TWSE, foreign institutional investors sold a net NT$13.95 billion worth of shares on the main board Tuesday.