Taiwan shares dive more than 100 points amid fears over Wuhan virus

Taipei Shares in Taiwan took a beating Friday, plunging more than 100 points to close below 11,700 points as investors remained concerned at the spread of the 2019 novel coronavirus (2019 nCoV) originally from Wuhan, the capital of Hubei Province in China, dealers said.

Selling focused on large cap stocks across the board led by the bellwether electronics sector, with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) falling more than 1.3 percent, driving the downturn on the main board to the end of the session, they said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex ended down 136.87 points, or 1.16 percent, at 11,612.81, after moving between 11,592.09 and 11,712.71, on turnover of NT$128.62 billion (US$4.27 billion).

The market opened down 0.31 percent as investors ignored the gains posted by U.S. markets, where the Dow Jones Industrial Average closed up 0.30 percent after China announced it would halve tariffs imposed on U.S. merchandise, dealers said.

The pressure increased on the main board, pushing the Taiex down more than 100 points in the wake of news that the number of confirmed Wuhan cases in China has breached 30,000 leaving at least 636 dead, and as confirmed cases in other countries in the region such as Japan and South Korea continued to rise, dealers added.

In Taiwan, the authorities reported Thursday that the number of confirmed cases rose by 5 from a day earlier to 16.

“The numbers in China appear scary,” Taishin Securities Investment Advisory analyst Tony Huang said. “Along with the rising numbers of confirmed cases in other countries, there have been no signs when the contagion will reach its peak and start to subside.”

“In particular in China, the spread of the virus is expected to hurt the economy, the second largest in the world, and the global economy is expected to feel the pinch,” Huang said.

Huang said the tech sector in which many firms have operations on the Chinese mainland, came under heavy pressure throughout the session, placing downward pressure on the broader market. “As the virus is spreading quickly in China, investors fear that Taiwanese firms with production there will not be able to restart operations as scheduled.”

Many manufacturers in China have been asked not to resume operations at least until Feb. 10.

“Even if they resume production as scheduled, the gathering of many workers in enclosed work places could lead to the further spread of the virus, making it harder for China to contain the contagion,” Huang said.

TSMC, the most heavily weighted stock on the local market, fell 1.35 percent to close at NT$328.00 with 28.73 million shares changing hands. TSMC’s losses led the electronics sector and the semiconductor sub index down 1.36 percent and 1.47 percent,respectively.

Selling experienced by TSMC spread to other tech heavyweights. Among them, integrated circuit packaging and testing services provider ASE Technology Holding Co. shed 3.98 percent to end at NT$74.80, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., fell 1.86 percent to close at NT$4,755.00, and iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization, lost 0.84 percent to end at NT$82.90.

Bucking the downturn, shares in United Microelectronics Corp., a smaller rival to TSMC, rose 0.62 percent to close at NT$16.35 after it reported a 31 percent sequential increase in net profit for the fourth quarter of last year.

Huang said downbeat sentiment on the global economy amid the spread of the Wuhan virus also pulled down non tech stocks. “Such sentiment was just like a contagion,” he said.

Among falling old economy stocks, textile maker Far Eastern New Century Corp. lost 2.25 percent to close at NT$28.20, Taiwan Cement Corp. fell 1.16 percent to end at NT$42.50, and Formosa Petrochemical Corp. dropped 1.44 percent to close at NT$89.20.

In the financial sector, which ended down 0.65 percent, E. Sun Financial Holding Co. fell 1.37 percent to close at NT$28.70, Fubon Financial Holding Co. lost 1.30 percent to end at NT$45.40, and Cathay Financial Holding Co. dropped 1.08 percent to close at NT$41.05.

“I cannot tell where the Taiex will find support as the market is largely dictated by news on the virus spreading,” Huang said. “Before the spread is contained, investors had better remain alert over more volatility.”

According to the TWSE, foreign institutional investors sold a net NT$8.86 billion worth of shares on the main board Friday.

Source: Focus Taiwan News Channel