Taiwan shares end sharply down on rapid Taiwan dollar appreciation

Taipei, May 5 (CNA) Shares in Taiwan closed sharply lower by more than 250 points Monday with export-oriented tech stocks in focus as the Taiwan dollar continued its rapid appreciation against the U.S. dollar, which raised concerns over large foreign exchange losses, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended 254.65 points, or 1.23 percent, at 20,532.99 after moving between 20,320.80 and 20,885.54. Turnover total NT$387.02 billion (US$12.92 billion).

"Worries over a stronger Taiwan dollar ran deeper today so investors simply dumped export-oriented electronics stocks after initial gains as they fear tech exporters will suffer large forex losses," Moore Securities Investment Consulting analyst Adam Lin said, referring to a 1.44 percent decline in the electronics index and a 1.30 percent fall in the semiconductor sub-index.

The U.S. dollar closed the morning down NT$1.114 or 3.71 percent at NT$29.950 Tuesday after falling 3.07 percent to end at NT$31.064 Friday. The losses on Friday were the steepest daily decline of the American unit against the Taiwan dollar since 2002.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted local stock, lost 1.26 percent to close at NT$938.00, contributing about 96 points to the Taiex's fall Monday.

Among other semiconductor stocks, IC packaging and testing services provider ASE Technology Holding Co. shed 3.60 percent to end at NT$134.00, and memory chip supplier Nanya Technology Corp. slid 3.93 percent to close at NT$34.25.

Smartphone IC designer MediaTek Inc. appeared resilient, falling only 0.38 percent to end at NT$1,295.00, off a low of NT$1,290.00.

"A stronger Taiwan dollar cut both ways as it also led foreign institutional investors to move funds into the local market and park their funds in large cap tech stocks," Lin said. "I suspect, MediaTek benefited from such fund flows today."

Despite the Taiex's fall, foreign institutional investors bought a net NT$24.46 billion worth of shares on the main board Monday, according to the TWSE.

Heavy pressure from the forex impact was also seen among other electronics hardware makers, Lin said.

iPhone assembler and artificial intelligence server maker Hon Hai Precision Industry Co., second to TSMC in terms of market value, lost 3.39 percent to close at NT$142.50, and Quanta Computer Inc., another AI maker, fell 1.79 percent to end at NT$246.50.

"The financial sector also fell victim to a weaker U.S. dollar amid fears that the value of their assets overseas will shrink after conversion into the Taiwan dollar," Lin said.

The financial sector lost 2.40 percent with Fubon Financial Holding Co. shedding 5.88 percent to close at NT$80.00, and Cathay Financial Holding Co. tumbling 6.81 percent to end at NT$54.70. In addition, CTBC Financial Holding Co. fell 2.36 percent to close at NT$39.30.

Domestic demand oriented stocks remained unscathed despite the appreciation of the Taiwan dollar, with food brand Uni-President Enterprises Corp. up 3.46 percent to close at NT$80.80, and cooking oil supplier Great Wall Enterprise Co. rising 5.19 percent to end at NT$62.80 in the food industry, which rose 3.81 percent, Lin said.

With the construction industry up 2.21 percent, King's Town Construction Co. soared 10 percent, the maximum daily increase, to close at NT$57.40, and Kindom Development Co. gained 3.65 percent to end at NT$54.00.

"If the Taiwan dollar continues to move quickly higher, the Taiex will come under more pressure," Lin said. "Investors had better keep more cash on hand, no less than 30 percent of their portfolios for now."