Taiwan shares fall below 9,000 points as electronics sector plunges

Shares in Taiwan fell almost 200 points to close below the 9,000 point mark, led by the bellwether electronics sector, as investors took their cue from losses posted by the tech-heavy NASDAQ index in the U.S. market overnight, dealers said.

Concerns have been running high over speculation that U.S. president-elect Donald Trump could draft policies unfavorable to high-tech firms such as Apple Inc. after blasting them for producing products overseas and causing the loss of millions of jobs during the election campaign, they said.

The latest selling in the electronics sector also reflected fears of more negative developments from the on-going earnings season after some local tech heavyweights reported foreign exchange losses due to a stronger Taiwan dollar in the third quarter, dealers said.

In addition, the fall of the Taiwan dollar against the U.S. dollar has also raised fears that foreign institutional investors have been moving funds out of the country, prompting investors to further cut their holdings in Taiwan, they said.

The weighted index on the Taiwan Stock Exchange ended the day down 194.42 points, or 2.12 percent, at 8,957.76, after moving between 8,949.38 and 9,067.65, on turnover of NT$113.26 billion (US$3.56 billion).

The market opened down 0.92 percent as the electronics sector came under downward pressure after a 0.81 percent decline on the NASDAQ index overnight, underperforming the Dow Jones Industrial Average, which closed up 1.17 percent, amid fears over Trump's policies toward high-tech firms, dealers said.

Selling in the local electronics sector escalated with large-cap stocks taking the brunt, led by Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock in Taiwan, pushing down the broader index by more than 2 percent at the end of trading, they said.

"Judging from today's expanded turnover, panic-driven selling in the electronics sector was heavy today," Concord Securities analyst Kerry Huang said. "As the Taiwan equity market, which is dominated by electronics stocks, is highly correlated with its U.S. counterpart, the losses on the NASDAQ index simply pushed the local market down."

Huang said that since many Taiwanese electronics firms serve as contract manufacturers for U.S. high-tech giants such as Apple, HP, Dell and Google Inc., if Trump adopts policies that have an adverse impact on those U.S. brands, Taiwanese firms in their supply chains could suffer.

The electronics sector closed down 2.82 percent and the semiconductor sub-index ended the day 2.25 percent lower after TSMC, the world's largest contract chip maker, which is believed to produce the A10 processor for the iPhone 7 model, shed 2.16 percent to close at NT$181.50, with 67.60 million shares changing hands

Among other falling high-tech stocks, Largan Precision Co. (???), a smartphone camera lens supplier to Apple, lost 3.07 percent to end at NT$3,395.00 but still remained the most expensive stock in Taiwan. Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads, shed 3.07 percent to close at NT$79.00.

"Investors also punished the electronics sector after some firms reported foreign exchange losses for the third quarter and there are fears of similar losses yet to come out during the earnings season," Huang said.

Quanta Computer Inc. (??), the world's largest contract notebook computer maker, lost 7.50 percent to close at NT$58.00 after reporting NT$1.13 billion in foreign exchange losses for the third quarter.

After announcing NT$290 million in foreign exchange losses for the third quarter, shares in Pegatron Corp. (??), an assembler of theiPhone 7, fell 10 percent, the maximum daily decline, to close at NT$74.70.

"Look at the heavy losses incurred by these high-tech stocks. I suspect that foreign institutional investors stayed on the sell side today," Huang said. "It seems that more and more foreign investors are moving funds back to the U.S. market in the hope of higher interest rates."

According to the TWSE, foreign institutional investors sold a net NT$23.96 billion worth of shares on the main board on Friday.

Outperforming the broader market, the financial sector closed up 0.36 percent, led by Cathay Financial Holding Co. (???), which rose 5.55 percent to close at NT$43.75 after reporting a 125 percent month-on-month increase in net profit for October.

Source: Focus Taiwan News Channel