Taiex plunges as buying rotates out of tech sector

Taipei, July 7 (CNA) Shares in Taiwan took a beating, falling over 2 percent Tuesday as investors continued to rotate funds out of the electronics sector amid worries over valuations and renewed geopolitical concerns following reports that an oil tanker was struck near the Strait of Hormuz, dealers said.

After moving in positive territory in the morning on a technical rebound from a session earlier, the Taiex, the Taiwan Stock Exchange's benchmark index, ended down 1,077.28 points, or 2.31 percent, at 45,479.11 after fluctuating between 45,432.02 and 46,967.04. Turnover totaled NT$1.17 trillion (US$36.46 billion).

"A recent strong showing made many investors wary of further volatility down the road," Concord Securities analyst Kerry Huang said. "The sell-off was concentrated in the tech sector, which had driven the Taiex sharply higher."

Selling also came after international news reports that Iran fired missiles at commercial vessels in the Strait of Hormuz with one hit ahead of a NATO summit, Huang said.

"Amid worries about high valuations among tech stocks, any negative leads like this added pressure on the market," he added.

Despite a 1.12 percent rise on the tech-heavy Nasdaq index overnight, the local electronics index lost 2.59 percent.

IC packaging and testing firm ASE Technology Holding Co. fell 4.12 percent to close at NT$651.00, IC assembly equipment supplier Scientech Corp. slid 6.05 percent to end at NT$808.00, and United Microelectronics Corp., the second largest contract chipmaker in Taiwan, shed 6.63 percent to close at NT$155.00.

In addition, iPhone assembler and AI server maker Hon Hai Precision Industry Co. fell 2.07 percent to end at NT$237.00, and power management solution provider Delta Electronics Inc. closed down 5.26 percent at NT$1,890.00.

Shares in contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which accounts for over 40 percent of total market value, ended down only 0.81 percent at NT$2,440.00.

"TSMC appeared resilient as investors hope it will give positive news from its investor conference (slated for July 16)," Huang said. "Investors have faith in the chipmaker's fundamentals during the AI era."

Selling rotated into select financial stocks but "trading volume was small, failing to give a meaningful boost to the Taiex," Huang added.

With the financial sector up 1.15 percent, Cathay Financial Holding Co. rose 3.85 percent to close at NT$97.00, Yuanta Financial Holding Co. added 2.05 percent to end at NT$69.80 and Fubon Financial Holding Co. closed up 1.23 percent at NT$123.00.

Old economy stocks largely came under pressure with Nan Ya Plastics Corp. tumbling 10 percent, the maximum daily decline, to end at NT$166.50, and Formosa Plastics Corp. shedding 5.13 percent to close at NT$57.30. However, food brand Uni-President Enterprises Corp. ended up 0.26 percent at NT$78.00.

"The Taiex fell below the 20-day moving average of 45,710, paving the way to more losses. Be careful," Huang said.

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$54.73 billion of shares on the main board Tuesday.