Taiwan shares plunge amid concerns over U.S.-China trade

Taipei, Nov. 12 (CNA) Shares in Taiwan took a beating Tuesday as the bellwether electronics sector came under heavy pressure amid growing angst over United States-China trade ties after Donald Trump becomes U.S. president in January, dealers said.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. led the downturn as investors feared Trump will impose more restrictions on chip shipments to China, sending the Taiex below the 23,000-point mark by the end of the trading session, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark weighted index, ended down 547.87 points, or 2.33 percent, at the day's low of 22,981.77, off a high of 23,276.76. Turnover totaled NT$438.54 billion (US$13.51 billion).

The market opened down 252.88 points, or 1.07 percent, and selling in semiconductor stocks continued, driven by the 2.54 percent fall in the Philadelphia Semiconductor Index in the United States overnight, dealers said.

Selling pressure extended to artificial intelligence-related stocks to put more pressure on the Taiex, which fell below the 20-day moving average of 23,214, a critical technical support level, by the end of the session, dealers said.

The electronics index moved lower by 2.69 percent, and the semiconductor sub-index fell 3.08 percent as TSMC, the most heavily weighted stock in the local market, shed 3.23 percent to close at NT$1,050.00.

TSMC's losses contributed about 280 points alone to the Taiex's fall.

"TSMC's losses simply followed a (3.55 percent) fall on its American depositary receipts (ADRs) on the U.S. market overnight," Moore Securities Investment Consulting analyst Adam Lin said.

"Investors had growing concerns over possible restrictions on exports to China Trump might impose after the recently reported ban on shipments of 7-nanometer TSMC chips or more advanced designs to the Chinese market," Lin said.

According to a Reuters report, the ban on 7nm process chip shipments from TSMC to China took effect Monday. The chipmaker said it was committed to complying with all applicable rules and regulations, including applicable export controls.

After the heavy losses to its ADRs overnight, TSMC dropped two notches to become the world's 10th most valuable company, falling behind Tesla at No. 8 and Berkshire Hathaway at No. 9.

The selling of TSMC shares spread to other semiconductor stocks. Smartphone IC designer MediaTek Inc. closed down 2.32 percent at NT$1,265.00, and IC packaging and testing services provider ASE Technology Holding Co. fell 3.17 percent to end at NT$152.50.

Alchip Technologies Inc., an application-specific integrated circuit (ASIC) designer, shed 4.93 percent to close at NT$2,315.00, while Scientech Corp. a supplier of IC assembly equipment to TSMC, ended up 0.11 percent at NT$463.50.

Following a 1.61 percent fall by AI chip designer Nvidia Corp. in the U.S. on Monday, iPhone and AI server assembler Hon Hai Precision Industry Co. lost 2.73 percent to close at NT$214.00.

Quanta Computer Inc., another AI server supplier, lost 3.69 percent to end at NT$313.00, and rival Wistron Corp. fell 4.10 percent to close at NT$117.00, but Wistron's cloud-enabled services subsidiary Wiwynn Corp. bucked the downturn, closing 0.72 percent higher at NT$2,100.00.

"Judging from the sell-off of tech heavyweights, I suspect foreign institutional investors largely stood on the sell side," Lin said, noting that they held about 50,000 more short than long position futures contracts as of Monday, a historical high.

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$47.64 billion in shares Tuesday.

Selling was also seen among non-tech industries throughout the session, Lin said.

Amid worries over Chinese demand for raw materials, Formosa Plastics Corp., which reported a NT$0.24 loss per share in the first nine months of 2024, closed 3.23 percent lower at NT$45.00, and Nan Ya Plastics Corp. also fell 3.42 percent to end at NT$40.95.

Elsewhere in the old economy sector, textile brand Far Eastern New Century Corp. dropped 1.41 percent to close at NT$34.95, and Eclat Textile Co. shed 3.34 percent to end at NT$550.00.

In addition, Shihlin Electric & Engineering Corp. fell 2.79 percent to close at NT$209.00, but Fortune Electric Co. gained 3.41 percent to end at NT$667.00 after it posted a 46.36 percent year-on-year increase in sales in October.

Also riding October sales growth, EVA Airways rose 0.64 percent to close at NT$39.50, and Starlux Airlines gained 1.09 percent to end at NT$27.70.

In the financial sector, which lost 0.69 percent, Cathay Financial Holding Co. fell 1.75 percent to close at NT$67.50, and E. Sun Financial Holding Co. dropped 1.09 percent to end at NT$27.15, while Fubon Financial Holding Co. closed unchanged at NT$91.70.

"Investors should watch whether the Taiex can bounce back above the 20-day moving average soon," Lin said.

"The critical factors determining how the local index will move will be whether foreign institutional investors trim their short position futures contracts and how tech stocks perform on U.S. markets."