Taiwan shares plunge on Middle East tensions, Fed signal

Taipei, June 19 (CNA) Shares in Taiwan took a beating, shedding more than 350 points Thursday with market sentiment spooked by the escalating conflicts between Israel and Iran, and a hint by the U.S. Federal Reserve that it is in no rush to cut interest rates, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 353.23 points, or 1.58 percent, at 22,003.50 after moving between 21,973.04 and 22,249.40. Turnover totaled NT$330.19 billion (US$11.16 billion).

Sell-offs were seen across the board, led by the bellwether electronics sector, with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) in focus, pushing the Taiex below the 240-day moving average of around 22,280 points by the end of the session, dealers said.

"An escalation of the Israel-Iran conflict without any immediate signs of improving has made many investors wary due to the possibility of involvement by the United States," Concord Capital Management analyst Lu Chin-wei said, referring to reports which said senior U.S. officials were preparing for a potential strike against Iran.

After a two-day policy making meeting, the Fed decided to leave interest rates unchanged, while its Chair Jerome Powell signaled the bank is not in a hurry to cut rates but will wait to see the impact of the Trump administration's tariff policies.

"The Taiex faced geopolitical unease and the Fed's 'no hurry' attitude to rate cuts, prompted selling to emerge with the weakness continuing until the end of the session," Lu said. "TSMC, again, dictated today's movement."

TSMC, the most heavily weighted local stock, lost 1.90 percent to close at NT$1,035.00, sending the electronics index down 1.55 percent and contributing about 160 points to the Taiex's decline.

Selling spread to other semiconductor stocks with smartphone IC designer MediaTek Inc. down 1.56 percent to end at NT$1,265.00 and IC packaging and testing services provider ASE Technology Holding Co. down 1.35 percent to close at NT$146.00. Bucking the downturn, memory chip supplier Nanya Technology Corp. gained 2.20 percent to end at NT$60.40 on a spike in product prices.

Also in the tech sector, iPhone assembler and artificial intelligence server maker Hon Hai Precision Industry Co. lost 1.28 percent to close at NT$154.00, while power management solution provider Delta Electronics Inc. ended up 0.87 percent at NT$404.00.

"Local institutional investors scrambled to pick up not only tech but also non-tech heavyweights on the spot market yesterday, the Juen futures contract settlement date, in a bid to profit in futures. Today, they simply gave up the gains," Lu said. "Petrochemical stocks fell amid today's sell-off.

With the petrochemical index down 2.57 percent, Formosa Plastics Corp. lost 3.23 percent to close at NT$34.40 and Formosa Petrochemical Corp. shed 4.16 percent to end at NT$36.90.

Also in the old economy sector, Shihlin Electric & Engineering Corp. fell 2.14 percent to close at NT$183.00, and Fortune Electric Co. shed 2.52 percent to end at NT$580.00.

In the financial sector, which lost 0.73 percent, Cathay Financial Holding Co. fell 1.63 percent to close at NT$66.20, and Fubon Financial Holding Co. ended down 0.80 percent at NT$86.70, while E. Sun Financial Holding Co. closed unchanged at NT$32.00.

"Judging from today's movement, the Taiex seemed to have strong support at around 22,000 points," Lu said. "I expect the AI frenzy will help to stabilize the market."

According to the TWSE, foreign institutional investors sold a net NT$21.47 billion worth of shares on the main board Thursday.