Taiwan shares end below 20,000 points in panic-led selling

Taipei, April 16 (CNA) Shares in Taiwan closed below the 20,000-point mark Tuesday for the first time in almost a month in panic-led selling amid concerns over Middle East tensions and lingering inflation that could put off U.S. interest rate cuts.

The Taiex, the Taiwan Stock Exchange's benchmark weighted index, ended down 547.81 points, or 2.68 percent, at 19,901.96 after moving between 19,844.54 and 20,365.11. Turnover totaled NT$534.91 billion (US$16.44 billion), compared with NT$488.49 billion a session earlier.

The market opened down 0.41 percent and selling of large cap stocks both in the electronics and non-tech sectors continued following a 1.20 percent decline in the S&P 500 index and a 1.79 percent fall in the tech-heavy Nasdaq Index overnight, dealers said.

Downward pressure escalated when the Taiex fell below the nearest technical support -- the 20-day moving average of 20,290 points -- pushing the Taiex down by about 605 points at one point early in the afternoon, and the weakness continued to the end of the session, dealers added.

The Taiex closed below 20,000 points for the first time since March 20, when it ended at 19,784.49.

"Investors simply seized on tensions in the Middle East as an excuse to take profits after the Taiex's recent strong showing," Mega International Investment Services Corp. Alex Huang said.

Before Tuesday, the Taiex had soared 1,483 points, or 7.82 percent, since the beginning of March.

"After seeing the Taiex fail to remain above the 20-day moving average, investors rushed to trim their holdings, keeping cash on hand. The expanded turnover reflected such panic-led selling," Huang said.

In addition to geopolitical unease, Huang said, markets at home and abroad have been affected by concerns over when the Fed will start to cut interest rates, especially after Washington reported hotter-than-expected inflation data and better-than-expected job data.

"Investors felt the pinch resulting from an increase in the U.S. 10-year Treasury yield overnight as fewer and fewer of them still expect the Fed to cut interest rates in June," Huang said.

On Monday, the 10-year Treasury yield jumped above 4.6 percent for the first time since November.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, led the downturn, falling 2.23 percent to close at NT$788.00.

TSMC's losses contributed about 146 points to the Taiex's fall and sent the electronics index and semiconductor sub-index down by 2.78 percent and 2.51 percent, respectively.

Among other large cap tech stocks, iPhone assembler Hon Hai Precision Industry Co. shed 3.42 percent to end at NT$141.00, and smartphone IC designer MediaTek Inc. lost 4.95 percent to close at NT$1,055.00.

"Judging from today's heavy selling, I think foreign institutional investors remained on the sell side," Huang said.

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$38.83 billion in shares Tuesday after a net sell of NT$28.88 billion on Monday, when the Taiex fell 1.38 percent.

Also in the electronics sector, United Microelectronics Corp., a smaller contract chipmaker, lost 2.91 percent to close at NT$50.10, and IC packaging and testing services provider ASE Technology Holding Co. shed 4.38 percent to end at NT$153.00.

Bucking the downturn, Global Unichip Corp., TSMC's application specific integrated circuit (ASIC) design subsidiary, rose 2.16 percent to close at NT$1,185.00, and Alchip Technologies Ltd., another ASIC designer, gained 2.72 percent to end at NT$2,830.00 after their recent consolidation.

"Old economy and financial stocks largely came under pressure, just as their tech counterparts did," Huang said.

After outperforming the broader market Monday, selling of so-called "military concept" stocks prevailed Tuesday.

Unmanned aerial vehicle (UAV) developer Thunder Tiger Corp. fell 2.40 percent to close at NT$81.40, and aircraft maintenance service provider Evergreen Aviation Technologies Corp. lost 6.03 percent to end at NT$109.00.

Elsewhere in the old economy sector, Formosa Petrochemical Corp. shed 3.40 percent to close at NT$71.10, Nan Ya Plastics Corp. lost 2.97 percent to end at NT$55.50, Formosa Plastics Corp. fell 2.30 percent to close at NT$68.00, and Formosa Chemicals & Fibre Corp. ended down 2.00 percent at NT$53.90.

The cement industry lost 0.55 percent, but outperformed the broader market. Taiwan Cement Corp. rose 0.31 percent to close at NT$32.45, while Asia Cement Corp. fell 1.55 percent to end at NT$41.40.

In the financial sector, which lost 2.29 percent, Fubon Financial Holding Co. lost 2.52 percent to close at NT$65.70, and Cathay Financial Holding Co. fell 2.25 percent to end at NT$47.85.

"After today's tumble, the Taiex has become technically weaker," Huang said. "If the market cannot rebound and close above today's high any time soon, that technical weakness is expected to continue."