Taiwan shares tumble on Fed rate hike fears

Taipei, Sept. 11 (CNA) Shares in Taiwan moved sharply lower by more than 750 points Friday, led by the electronics sector, amid growing fears over an interest rate hike by the U.S. Federal Reserve after Washington reported the fastest monthly growth in the producer price index in August since May and international crude oil prices surged, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark index, ended down 755.64 points, or 1.61 percent, at 46,184.85 after moving between 45,942.44 and 46,651.21. Turnover totaled NT$721.91 billion (US$22.84 billion).

"The inflation worries sent U.S. Treasury yields higher, reinforcing fears over a Fed rate hike," Hua Nan Securities analyst Kevin Su said. "So interest rate-sensitive tech stocks in the United States lost steam overnight and their counterparts in Taiwan simply followed suit."

After the Philadelphia Semiconductor Index fell 2.66 percent and American depositary receipts of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) dropped 1.68 percent overnight, TSMC shares in Taiwan shed 1.63 percent to close at NT$2,410.00, contributing about 320 points to the Taiex's decline.

Smartphone IC designer MediaTek Inc. lost 2.86 percent to close at NT$4,585.00, memory chip supplier Nanya Technology Corp. dropped 4.27 percent to close at NT$493.00, and IC packaging and testing firm ASE Technology Holding Co. ended down 4.92 percent at NT$618.00.

Also in the tech sector, iPhone assembler and AI server maker Hon Hai Precision Industry Co. lost 1.20 percent to close at NT$248.00, while power management solution provider Delta Electronics Inc. shed 3.28 percent to end at NT$1,620.00. Bucking the downturn, Quanta Computer Inc., another AI server producer, closed up 0.15 percent at NT$336.50.

"However, funds rotated to financial stocks as safe havens, giving some support to the broader market," Su said. "The current strong demand for liquidity has strengthened their profitability on higher interest income."

With the financial index up 1.12 percent, E. Sun Financial Holding Co. rose 3.00 percent to end at NT$46.30 and Mega Financial Holding Co. gained 3.61 percent to close at NT$51.80, while Fubon Financial Holding Co. and Cathay Financial Holding Co. ended unchanged at NT$148.50 and NT$110.50, respectively.

Dealers said old economy stocks largely came under pressure from concerns over a Fed rate hike, with raw material stocks in focus.

China Steel Corp., Taiwan's largest steelmaker, fell 1.05 percent to close at NT$18.90, while Chung Hung Steel Corp. ended down 1.48 percent at NT$16.65.

Longchen Paper & Packaging Co. lost 1.88 percent to close at NT$10.45, while rival Cheng Loong Corp. fell 2.94 percent to end at NT$24.80.

"It is worth watching the August U.S. consumer price index due later today, as the data serves as an important barometer of the Fed's decision making," Su said.

Following the PPI data, the odds of the Fed raising rates by 25 basis points next week rose to around 70 percent.

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$89.27 billion worth of shares on the main board Friday.