Taiwan shares tumble after Fed's hint of slower pace in rate cuts

Taipei, Dec. 19 (CNA) Shares in Taiwan came under heavy pressure, falling more than 230 points to close below the 23,000 point mark Thursday, with selling sparked by a plunge on U.S. markets overnight after the U.S. Federal Reserve implied it plans to slow the pace of its rate cut cycle, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 236.42 points, or 1.02 percent, at 22,932.25 after moving between 22,743.30 and 22,947.56. Turnover totaled NT$410.161 billion (US$12.55 billion).

The market opened down 0.95 percent and dipped to the day's low, falling 425.37 points in the morning session as investors took their cue from a 2.58 percent dive on the Dow Jones Industrial Average and a 3.56 percent plunge on the tech-heavy Nasdaq index Wednesday, dealers said.

Selling was seen across the board with the bellwether electronics sector, which is interest rate sensitive, in focus before the losses were trimmed in the afternoon session, capping the downturn by the end of the session, dealers added.

"Today's losses largely at home and abroad reflected the disappointment with the Fed's interest rate outlook," Cathay Futures Consultant analyst Tsai Ming-han (蔡明翰) said. "Tech stocks took a beating in the wake of huge losses suffered by their U.S. counterparts."

While the Fed cut interest rates by 25 basis points overnight as expected, its dot-plot, which indicates individual members' expectations for rates, showed the American central bank will have only two rate cuts next year, less than the four it had previously signaled.

"Fortunately, the Taiex appeared more resilient than U.S. markets as some investors were willing to hunt bargains, helping the main board recoup some of its earlier losses," Tsai said.

The electronics index fell 1.02 percent to close at 1,271.21, off a low of 1,258.64 after contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock, came off a low of NT$1,055.00 to end at NT$1,070.00, down 1.38 percent. TSMC's swing from its low to the closing level allowed the Taiex to recover about 120 points.

Among other semiconductor heavyweights, United Microelectronics Corp., a smaller contract chipmaker, lost 1.60 percent to close at NT$43.00, while smartphone IC designer MediaTek Inc. stayed resilient to end unchanged at NT$1,420.00.

Second to TSMC in terms of market value, iPhone assembler Hon Hai Precision Industry Co., which also rolls out artificial intelligence servers, shed 1.90 percent to close at NT$181.00, while Quanta Computer Inc. another AI server maker, lost 0.54 percent to end at NT$274,50.

Non-tech stocks were also hit by sentiment dampened by the Fed's weaker-than-expected rate outlook, dealers said.

Eclat Textile Co. shed 2.26 percent to end at NT$497.50, and rival Makalot Industrial Co. lost 1.87 percent to close at NT$314.50. Bucking the downturn, Far Eastern New Century Co., another major textile supplier, ended up 0.45 percent at NT$33.20.

In the financial sector, which lost 1.04 percent, Cathay Financial Holding Co. dropped 1.60 percent to close at NT$67.70, and Fubon Financial Holding Co. shed 1.09 percent to end at NT$90.90.

In response to the Taiex's heavy losses, Peng Jin-lung (彭金隆), chairman of the Financial Supervisory Commission, told reporters that Taiwan has healthy economic fundamentals, which are expected to lend support to the local stock market, citing an almost 12 percent year-on-year increase in consolidated sales by listed companies on the main board and the over-the-counter market in the first 10 months of this year.

According to the TWSE, foreign institutional investors sold a net NT$33.52 billion worth of shares on the main board Thursday.