Taiwan shares plunge amid escalating Russia-Ukraine tensions

02/22/2022 06:14 PM
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CNA file photo
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Taipei, Feb. 22 (CNA) Shares in Taiwan took a beating Tuesday, tumbling more than 250 points with market sentiment spooked by escalating tensions between Russia and Ukraine.

Selling was seen across the board on an increase in turnover, while contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, showed enough resilience to prevent the broader market from falling further, according to dealers.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 252.20 points, or 1.38 percent, at 17,969.29, after moving between 17,840.38 and 18,159.51. Turnover totaled NT$336.51 billion (US$12.08 billion).

The market opened down 0.34 percent and selling soon intensified as investors took cues from the news that Russian President Vladimir Putin said he would recognize the independence of two breakaway regions in Ukraine. Russia later sent troops into the two regions, which boosted geopolitical tensions and undercut market confidence, dealers said.

With the Taiex dipping below 17,900 points at one point, some bargain hunters emerged, picking up TSMC, helping the broader market recoup part of its earlier losses by the end of the session, they said.

Russia-Ukraine tensions

"Markets in the region were completely dictated by escalating tensions between Russia and Ukraine, the particular noneconomic factor, and Taipei was no exception," Concord Securities analyst Kerry Huang said, referring to the markets in Tokyo, Hong Kong, Seoul, and Shanghai.

"Selling focused on large stocks in both electronics and nontech sectors which had served as an anchor to the Taiex's recent upturn as investors simply took advantage of their relatively high valuations," Huang said.

The bellwether electronics sector fell 1.24 percent with the semiconductor sub-index down 1.19 percent.

Tech stocks

Among the falling tech heavyweights, smartphone chip designer MediaTek Inc. lost 1.77 percent to close at NT$1,110.00. United Microelectronics Corp., the second-largest contract chipmaker in Taiwan after TSMC, fell 1.86 percent to end at NT$52.80, while power management IC designer Silergy Corp. shed 2.70 percent to close at NT$3,600.00.

In the dynamic random access memory (DRAM) chip industry, Nanya Technology Corp. lost 2.11 percent to end at NT$78.70, and Winbond Electronics Corp. fell 1.73 percent to close at NT$34.15.

"Fortunately, TSMC remained resilient throughout the session, falling moderately after recovering from an earlier low to stabilize the broader market to some extent," Huang said. "At a time when the Taiwan dollar weakened against the U.S. dollar, I suspect the support for TSMC did not come from foreign institutional investors but from government-led funds."

TSMC lost 0.79 percent to end at NT$627.00 after coming off a low of NT$625.00.

"TSMC has seen technical support as it moved closer to the 60-day moving average of NT$625.00," Huang said.

According to the TWSE, foreign institutional investors sold a net NT$38.66 billion worth of shares on the main board Tuesday.

Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co. lost 1.42 percent to close at NT$104.50, while printed circuit board maker Compeq Manufacturing Co. rose 0.94 percent to end at NT$48.48.

Huang said old economy industries, the steel and transportation sectors in particular, also came under pressure as investors seized upon geopolitical tensions as an excuse to pocket their recent gains.

The steel sector lost 1.59 percent despite a spike in hot-rolled steel product prices, Huang said. Chung Hung Steel Corp. shed 3.63 percent to close at NT$41.20, China Steel Structure Corp. lost 3.39 percent to end at NT$59.90, Tung Ho Steel Enterprise Corp. dropped 1.85 percent to close at NT$68.80, and China Steel Corp., the largest steelmaker in Taiwan, fell 0.82 percent to end at NT$36.15.

Non-tech sectors

In the transportation sector, which lost 3.57 percent, Evergreen Marine Corp., Taiwan's largest container cargo shipper, lost 3.06 percent to close at NT$142.50, while rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. fell 5.02 percent and 6.92 percent, respectively, to end at NT$113.50 and NT$181.50.

Among airline stocks, China Airlines lost 1.90 percent to close at NT$28.45, while EVA Airways rose 1.70 percent to end at NT$32.95.

Elsewhere, Formosa Plastics Corp. lost 1.94 percent to close at NT$96.10, and textile brand Far Eastern New Century Corp. fell 0.83 percent to end at NT$29.95.

"Today's losses pushed down the Taiex below the support around the 60-day moving average of 17,983," Huang said. "If the main board continues to weaken on rising geopolitical tensions, the index could test the next support at around 17,633 points, an intraday low seen on Jan. 26."

(By Frances Huang)

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