Taiwan shares extend losses on virus fears despite US rebound

Taipei, Shares in Taiwan extended losses from a session earlier and moved lower by more than 200 points Wednesday even after the U.S. markets staged a 5.2 percent technical rebound overnight amid rising concerns over the COVID-19 contagion, dealers said.

Concerns were raised after the Central Epidemic Command Center (CECC) announced during a morning session that foreign nationals would be barred from entering Taiwan, starting Thursday, which shows Taiwan faces rising risks as seen by a spike in imported cases, they said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex closed down 220.96 points, or 2.34 percent, at the day's low of 9,218.67, off a high of 9,509.61, on turnover of NT$209.75 billion (US$ 6.94 billion).

The market opened up 0.15 percent and rose to the day's high in the early morning session as investors took their cue from the gains on U.S. markets, where the Dow Jones Industrial Average bounced back by 1,048 points or 5.2 percent Tuesday on news that the White House is seeking a stimulus package worth anywhere from US$850 billion to more than US$1 trillion, dealers said.

However, with the Taiex moving higher and breaching the 9,500 point mark, some investors shifted to the sell side, and selling escalated, pushing the main board below 9,300 points by the end of the session after the CECC announced the ban on entry by foreign nationals into Taiwan with some exceptions, dealers added.

"The CECC announcement prompted many investors to think the virus spread in Taiwan is deteriorating, and without any dramatic action by the authorities, like the entry ban on foreign nationals, the situation could get out of control," Mega International Investment Services Corp. analyst Alex Huang said.

Under the entry ban, only foreign nationals who hold Alien Resident Certificates (ARCs) or documents proving they are in Taiwan for diplomatic or other official purposes or to fulfill business contracts, as well as those who have received special permits, can enter the country, but will be placed in home quarantine for 14 days.

The CECC reported 23 newly confirmed COVID-19 cases, with 21 imported, Wednesday, pushing up the total to 100, 71 of which were imported.

"Investors took their cue from the seriousness of the increase in imported cases, rushing to cut their holdings with selling on the rise, in particular in the afternoon session, focusing on large cap stocks across the board," Huang said.

"Moreover, the Dow bounced back by only 1,000 points Tuesday after it plunged almost 3,000 points a day earlier and could encounter more volatility down the road as long as there are no signs of the virus spread easing in the United States and Europe," Huang said.

Huang said investors scrambled to punish the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market.

TSMC shed 2.99 percent to close at the day's low of NT$260.00 with 116.35 million shares changing hands. Led by TSMC, the electronics sector and the semiconductor sub-index fell 2.28 percent and 3.07 percent.

"As long as the global equity markets remain volatile, foreign institutional investors are expected to dump stock," Huang said. "I expect the stock will not see strong technical support until it moves closer to NT$230-NT$240."

Also in the electronics sector, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., fell 3.61 percent to close at the day's low of NT$3,600.00, with iPhone assembler Hon Hai Precision Industry Co. more resilient, down only 0.85 percent to end at NT$70.00 on news that the company has obtained approval to reopen its factories in the Chinese city of Wuhan, where the COVID-19 broke out at the end of December.

Bucking the downturn of the tech sector, Catcher Technology Co., a metal casing maker for Apple's gadgets, rose 1.86 percent to close at NT$192.00 after the company launched a share buyback program from March 18-May 17 to shore up its share price.

A fall in international crude oil prices continued to send petrochemical stocks into a tailspin, Huang said. Among them, Formosa Plastics Corp. shed 6.17 percent to close at NT$70.00, Nan Ya Plastics Corp. lost 6.43 percent to end at NT$52.40, and Formosa Chemicals & Fibre Corp. fell 6.80 percent to close at NT$61.70.

In the financial sector, which ended down 1.7 percent amid fears over a rate cut by the central bank Thursday, E. Sun Financial Holding Co. shed 5.73 percent to close at NT$22.20, Fubon Financial Holding Co. lost 1.34 percent to end at NT$36.85, and Cathay Financial Holding Co. fell 1.00 percent to close at NT$34.65.

"Judging from the heavy losses suffered by these market heavyweights, I think foreign institutional investors stayed on the sell side today," Huang said.

According to the TWSE, foreign institutional investors sold a net NT$28.57 billion worth of shares on the main board Wednesday after net sales of NT$23.04 billion on Tuesday.

Source: Focus Taiwan News Channel