Taiwan shares fall by almost 200 points after big U.S. losses

06/29/2022 04:56 PM
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CNA file photo
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Taipei, June 29 (CNA) Shares in Taiwan took a beating, plunging by almost 200 points Wednesday, as investors took cues from heavy losses suffered by the U.S. markets in the wake of weaker than expected economic data, dealers said.

Selling again focused on large-cap electronics stocks, driving the broader market lower, while the transportation sector also came under pressure, led by shipping heavyweights, pushing the broader market down further by the end of the session, they said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down by 199.79 points, or 1.29 percent, at 15,240.13, after moving between 15,218.07 and 15,365.54. Turnover totaled NT$243.47 billion (US$8.2 billion).

U.S. market sell-off

The market opened down on Wednesday by 0.48 percent, extending losses from a session earlier, when the Taiex lost 0.70 percent, and downward pressure increased as investors were motivated to cut holdings by a plunge on the U.S. markets, where the Dow Jones Industrial Average fell by 1.56 percent and the tech-heavy Nasdaq index dropped by 2.98 percent after the release of lower than expected consumer confidence data for June, dealers said.

In the wake of the losses among tech stocks on the U.S. markets, the local electronics sector lost 1.25 percent with the sub-index for the semiconductor industry down by 1.53 percent, dealers added.

"The U.S. sell-off reflected fragile market sentiment toward the economy, in particular after the release of the ugly June consumer confidence index. Other equity markets simply followed suit and Taipei was no exception," MasterLink Securities analyst Tom Tang said.

The U.S. Conference Board reported overnight that the consumer confidence index fell to 98.7 in June, down from 103.2 in May, as the June figure missed an earlier market estimate of 100.

"The weaker than expected June data showed consumer confidence was spooked by a hawkish U.S. Federal Reserve tightening at a time of skyrocketing inflation as an aggressive rate hike cycle by the Fed is expected to hurt the economy," Tang said.

"As a result, the local electronics sector fell victim to rising interest rates and many semiconductor heavyweights moved lower throughout the session," Tang said.

Tech sector leads losses

Leading the Taiex in trending lower, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, dropped by 1.31 percent to close at the day's low of NT$491.00 after a 1.77-percent fall in its American depositary receipts on the U.S. markets overnight.

"TSMC has lost a lot in recent sessions, falling below the NT$500 mark," Tang said "It is possible for the stock to find some technical support at around NT$485, the intraday low seen on June 23, as such a valuation looks attractive to bargain hunters," Tang said.

Among other falling semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, fell by 2.27 percent to end at NT$40.90 after a 3.28-percent fall in its ADRs Tuesday, and IC packaging and testing services provider ASE Technology Holding Co. plunged by 5.83 percent to close at NT$79.10. Bucking the downturn, smartphone IC designer MediaTek Inc. benefited from bargain hunting, rising by 1.54 percent to end at NT$661.00.

Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co. appeared resilient, edging down by only 0.89 percent to close at NT$111.00, while power management solution provider Delta Electronics Inc. fell by 1.30 percent to end at NT$227.50.

Transportation companies

Outside of the tech sector, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, failed to sustain its initial strength to incur losses by falling by 1.66 percent to close at NT$89.00 after going ex-dividend Wednesday.

Evergreen Marine's selling-off was replicated with other major container cargo stocks which contributed to the transportation sector falling by 7.79 percent, Tang said.

Evergreen Marine's rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. fell by 6.76 percent and 6.25 percent, respectively, to end at NT$85.50 and NT$120.00.

"The silver lining in the transportation sector was that airline stocks stayed above the previous closing on hopes that the government will ease border controls soon," Tang said. Among them, China Airlines rose by 1.72 percent to close at NT$23.60, and EVA Airways increased by 1.28 percent to end at NT$31.60.

Outperformers

The tourism sector was also lifted by hopes of border-control easing with FarGlory Hotel Co. up 1.39 percent to close at NT$36.50, and Formosa International Hotels Corp. up 0.88 percent to end at NT$171.00.

Buying also rotated to the biotech sector amid lingering concerns over an increase in domestic COVID-19 cases. In the sector, medical device developer Maxigen Biotech Inc. surged by 10 percent, the maximum daily increase, to close at NT$48.30, and home test kit supplier Panion & BF Biotech Inc. increased by 5.96 percent to end at NT$124.50.

"The movement of the Taiex is likely to continue to be dominated by the U.S. markets," Tang said. "As external volatility is possible, I suggest that 60-70 percent of investors' portfolios should be cash for the moment."

According to the TWSE, foreign institutional investors sold a net NT$5.94 billion worth of shares on the main board Wednesday.

(By Frances Huang)

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