Shares in Taiwan came under heavy pressure, falling by 270 points to reach the local market’s lowest point in two years Thursday, as investors cut their holdings ahead of the release of the U.S. September consumer price index (CPI) later in the day amid lingering fears over a hawkish Federal Reserve, dealers said.
Market sentiment also remained cautious about the tech sector ahead of an investor conference of the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) that opened after the market close, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down by 270.51 points, or 2.07 percent, at 12,810.73 after moving between 12,809.43 and 13,111.39. Turnover totaled NT$208.1 billion (US$6.5 billion).
Thursday’s close was the lowest level since Nov. 3, 2020, when the Taiex ended at 12,736.01.
13,000-point level, U.S. data
The market opened up by 0.21 percent and rose slightly to reach the day’s high in the early morning session on a mild technical rebound, but selling soon followed and escalated across the board in the afternoon session to push the Taiex below the 13,000-point mark, dealers said.
The 13,000-point level seemed to be the bottom line for government-led funds on Wednesday as they jumped into the trading floor to vault the main board back up to that level during that session, but Thursday’s selling amid concerns over rate increases plunged the index below that level, dealers added.
“The market remained bothered by the rate hike cycle in the U.S., in particular as Washington will release its CPI numbers later in the day,” Mega International Investment Services Corp. analyst Alex Huang said.
Before the CPI data, the U.S. September producer price index (PPI), a measure of prices at the wholesale level, was released overnight and showed an increase of 0.4 percent after a 0.2-percent decline in August as inflation persisted. The September PPI beat a market forecast of a 0.2-percent rise.
“Investors fear the September CPI data will present a shock. For now, many investors have simply trimmed their positions to prevent further losses if the persistent inflation drives the Fed to raise its key interest rates by an additional 75 basis points in November with another round of hikes to come in December,” Lin said.
Tech stocks
In addition to the rate hikes, the tech sector continued to be affected by the newly imposed ban on certain IC exports to China by the U.S., Huang said. The electronics sector fell 1.40 percent with the semiconductor sub-index down by 1.24 percent.
“Moreover, market attention was still focused on TSMC, which will provide guidance for the fourth quarter as concerns are growing that the export ban will exacerbate the current inventory adjustments,” Huang said.
TSMC, the most heavily weighted stock in the local market, fell 0.63 percent to close at NT$395.00 after failing to sustain its earlier gains. Right after the market close, the chipmaker reported in an investor conference that its earnings per share for the third quarter had hit a new high of NT$10.83.
Among other semiconductor stocks, TSMC’s application-specific integrated circuit (ASIC) design subsidiary Global Unichip Corp. plunged 10 percent, the maximum daily decline, to end at NT$444.50, and Alchip Technologies Ltd., another ASIC designer, dropped 8.71 percent to close at NT$681.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. appeared resilient, rising 0.49 percent to end at NT$103.50, and flat-panel maker AU Optronics Corp. also bucked the downturn, increasing 2.13 percent to close at NT$16.80.
Outside tech sector
“Today, selling rotated to old economy and financial stocks which had appeared resilient compared with their tech counterparts in recent sessions,” Huang said. “At a time of aggressive rate hikes by the Fed and other major central banks in the world, concerns over the impact on the global economy and demand are deepening.”
The petrochemical sector fell 2.97 percent with Formosa Petrochemical Corp. falling 3.33 percent to close at NT$75.50, Formosa Plastics Corp. dropping 2.35 percent to end at NT$78.90, Nan Ya Plastics Corp. decreasing 2.00 percent to close at NT$63.80, and Formosa Chemicals & Fibre Corp. ending down 1.95 percent at NT$65.40.
Although Taiwan reopened its borders with no quarantine required for visitors upon arrivals amid COVID-19, starting Thursday, the tourism sector moved sharply lower by 3.89 percent.
- Taiwan lifts entry quarantine, reopen to all visitors Oct. 13
“The border reopening factors had been priced in recently. However, investors were compelled by inflation concerns to lock in their gains,” Huang said.
In the tourism sector, Phoenix Tours International, Inc. plunged 10 percent to close at NT$52.20 and Lion Travel Service Corp. fell 8.14 percent to end at NT$86.90. In addition, Leofoo Development Co. fell 5.74 percent to close at NT$15.60 and Formosa International Hotels Corp. dropped 2.36 percent to end at NT$186.00.
Selling spread to airline stocks with China Airlines and EVA Airways both tumbling 10 percent to close at NT$17.45 and NT$25.15, respectively.
The financial sector also fell 2.75 percent amid fears over falling asset values due to a decline in bond prices overseas, dealers said. In the sector, Cathay Financial Holding Co. dropped 5.31 percent to close at NT$37.45, and Fubon Financial Holding Co. dropped 2.92 percent to end at NT$48.15.
“Despite the sell-off, turnover remained thin, indicating that few investors wanted to buy the dips for the time being as the local stock market faces uncertainties,” Huang said.
According to the TWSE, foreign institutional investors sold a net NT$9.76 billion worth of shares on the main board Thursday.
Source: Focus Taiwan News Channel