Taiwan shares end below 10,900 points amid concerns over eurozone

Taipei, Shares in Taiwan plunged more than 100 points to close below the 10,900 point mark Wednesday in the wake of a falling Wall Street overnight amid renewed concerns over the eurozone caused by a political standoff in Italy, dealers said.

Meanwhile, fears over a trade war between the United States and China are on the rise after Washington said Tuesday it will draft a list of additional tariffs it plans to impose on US$50 billion worth of Chinese goods in June, they said.

Selling focused on the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and other large cap stocks, while the financial sector also took a beating as local investors took their cue from heavy losses incurred by banking stocks on Wall Street overnight, they said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex closed down 142.95 points, or 1.30 percent, at 10,821.17, after moving between 10,799.75 and 10,925.21, with turnover of NT$160.73 billion (US$5.36 billion).

The market opened down 0.35 percent, and selling accelerated on the weakness on Wall Street, where the Dow Jones Industrial Average fell nearly 400 points or 1.58 percent overnight. That increasingly weighed on investor sentiment with tech and financial heavyweights dragging the Taiex down sharply by the end of the session, dealers said.

The losses suffered by Wall Street came after the political drama in Italy intensified, with President Sergio Mattarella blocking the formation of a government on Sunday, which sent the euro into a tailspin.

"Local investors were caught off guard by the latest plunge on the U.S. market," Taishin Securities Investment Advisory analyst Tony Huang said, "Although few can be sure whether the political standoff in Italy will turn into a bigger crisis for the eurozone, whenever Wall Street falls, other markets follow."

MasterLink Securities analyst Tom Tang said Wednesday's sell-off also happened because investors are losing patience after the main board failed to end above 11,000 points in recent sessions. "It was no surprise that investors dumped liquid large cap stocks and TSMC was one of the ideal stocks for foreign investors to sell for funds," Huang said.

TSMC, the most heavily weighted stock on the local market, fell NT$4.00 or 1.78 percent to close at NT$221.00 with 49.13 million shares changing hands. The stock contributed about 40 points to the fall in the Taiex on Wednesday.

Led by TSMC, the bellwether electronics sector ended down 1.27 percent and the semiconductor sub-index ended 1.69 percent lower.

Also in the high tech sector, shares in integrated circuit designer MediaTek Inc. dropped 1.59 percent to close at NT$310.00, and Largan Precision Co., a smartphone camera lens supplier to Apple Inc., lost 1.29 percent to end at NT$4,200.00.

In the financial sector, which closed down 1.94 percent, Mega Financial Holding Co. lost 2.04 percent to end at NT$26.35, CTBC Financial Holding Co. fell 2.48 percent to close at NT$21.60, and Fubon Financial Holding Co. shed 3.03 percent to end at NT$51.20.

In addition to the political situation in Italy, "investors have to watch closely how trade friction between Washington and Beijing evolves, as it is expected to impact the global financial markets," Huang said.

Huang said if volatility on Wall Street continues, the local main board could move lower and it is even possible the Taiex could test the technical support of the 240-day moving average of 10,658 points in the short term.

According to the TWSE, foreign institutional investors sold a net NT$15.29 billion worth of shares on the main board Wednesday.

Source: Focus Taiwan News Channel