Taiwan shares see 3rd steepest fall in history after U.S. plunge

Taipei, Sept. 4 (CNA) Shares in Taiwan suffered the third steepest fall in history, falling almost 1,000 points on Wednesday with the sell-off triggered by a tumble on U.S. markets overnight amid growing concerns over the possible hard landing of the American economy, dealers said.

Tech stocks led the downturn on the main board as investors took their cues from a plunge in the shares of U.S.-based artificial intelligence chip designer Nvidia Corp., which is facing an anti-trust investigation by the Department of Justice, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 999.46 points, or 4.52 percent, at 21,092.75, after moving between 20,922.17 and 21,574.65. Turnover totaled NT$485.11 billion (US$15.09 billion).

Wednesday's losses were the third steepest fall after a single session drop of 1,807.21 points on Aug. 5, and a decline of 1,004.01 recorded on Aug. 2.

The heavy losses pushed the market capitalization of the local main board down by NT$3.17 trillion to NT$67.36 trillion on Wednesday, marking the first time in nearly one month that market value fell below the NT$70 trillion mark.

The market opened down 2.34 percent and selling escalated with large tech cap stocks in focus, pushing down the Taiex to the day's low of about 1,170 points at one point, in the wake of a 1.51 percent fall on the Dow Jones Industrial Average and a 3.26 percent drop on the tech-heavy Nasdaq index overnight.

Worries continue over a possible recession in the United States after the ISM manufacturing index for August pointed to a continued contraction, dealers said.

The weakness on the main board continued until the end of the session as downward pressure spread to old economy and financial stocks throughout the trading session, dealers said.

"The latest manufacturing activity raised fears over a possible hard landing for the U.S. economy, sending ripples through the U.S. stock markets overnight.

"It was no surprise that the regional markets including Taipei followed suit," Mega International Investment Services Corp. analyst Alex Huang said.

The August ISM manufacturing index stood at 47.2 below the break even point of 50 and stayed in contraction. The August figure also failed to meet an earlier market estimate of 47.9, despite a slight rise from July's 46.8.

"More importantly, Nvidia shares reported a steep fall (of 9.53 percent) overnight as the U.S. DOC sent a subpoena to Nvidia Corp. to seek evidence that the chipmaker violated antitrust laws, which turned many investors away from tech stocks on the U.S. markets and on regional markets," Huang said.

Coming under great pressure, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, lost 5.43 percent to close at NT$889.00, its lowest closing level since Aug. 6, when the stock ended at NT$880.00.

TSMC's losses contributed about 413 points to the Taiex's fall and sent the electronics index and semiconductor sub-index down by 5.15 percent and 5.29 percent, respectively, Wednesday.

TSMC's sell-off was also reflected among other large cap semiconductor stocks, with smartphone IC designer MediaTek Inc. down 6.97 percent to end at NT$1,135.00, IC packaging and testing services provider ASE Technology Holding Co. falling 5.28 percent to close at NT$143.50, and United Microelectronics Corp., a smaller contract chipmaker, down 3.27 percent to end at NT$53.30.

In the wake of Nvidia's weakness, Taiwan's AI related stocks also moved sharply lower, including AI server maker Quanta Computer Inc., which lost 8.09 percent to close at NT$250.00, rival Wistron Corp., which shed 5.15 percent to end at NT$94.00, and Wistron's cloud application subsidiary Wiwynn Corp., which ended down 8.97 percent to close at NT$1,675.00.

Second to TSMC in terms of market value, iPhone assembler Hon Hai Precision Industry Co., which also rolls out AI servers, shed 2.97 percent to end at NT$179.50.

"With the VIX surging on U.S. markets overnight, selling on the Taiex was seen across the board with old economy and financial heavyweights also taking a beating," Huang said, referring to the CBOE Volatility Index (VIX), a Wall Street "fear gauge," which surged by 20 percent Tuesday.

The petrochemical index lost 4.38 percent after international crude oil prices plunged about 5 percent overnight as reports said Libya's rival governments could strike a deal that would help restore oil output after days of disruptions.

Among petrochemical stocks, Formosa Plastics Corp. lost 5.62 percent to close at NT$47.00, and Nan Ya Plastics Corp. shed 6.68 percent to end at NT$40.50.

In the crude price sensitive textile industry, Far Eastern New Century Corp. fell 2.23 percent to close at NT$35.00, and Eclat Textile Corp. dropped 3.00 percent to end at NT$518.00.

Elsewhere in the old economy sector, Shihlin Paper Corp. shed 4.41 percent to close at NT$56.30, and rival Cheng Loong Corp. ended 6.23 percent lower at NT$24.10.

In the financial sector, which lost 2.55 percent, Cathay Financial Holding Co. shed 3.30 percent to close at NT$61.60, and Fubon Financial Holding Co. fell 3.42 percent to end at NT$90.50.

"For more clues about the U.S. economy, the upcoming data will be very critical," Huang said, referring to the weekly jobless claims due on Thursday and the August nonfarm payroll report due on Friday.

"I expect TSMC will see strong technical support ahead of NT$882.00, the 120-day moving average, so the broader market could see limited volatility in the short term," Huang added.

According to the TWSE, foreign institutional investors sold a net NT$100.75 billion worth of shares on the main board Wednesday, the largest daily net sales figures ever.