Taiwan shares fall sharply in mid-morning session

Taipei, Taiwan shares plunged on Thursday, falling more than 100 points at one point in the mid-morning trading session amid escalating fears that the U.S. Federal Reserve will raise its key interest rates in a policymaking meeting next week, dealers said.

The bellwether electronics sector led the downturn as investors dumped large-cap high-tech stocks such as contract chip maker Taiwan Semiconductor Manufacturing Co. (???), while the petrochemical sector trended lower, adding pressure to the broader market after international crude oil prices dived overnight, the dealers said.

As of 11:15 a.m., the weighted index on the Taiwan Stock Exchange had fallen 85.80 points, or 0.88 percent, to 9,667.65 points, after shedding 103.13 points to an early low of 9,650.32, on turnover of NT$50.59 billion (US$1.63 billion).

"With the latest ADP (Automatic Data Processing Inc.) data showing better than expected job enrollment in the U.S. private sector, fears in the market that the Fed will hike interest rates soon are rising further," Taishin Securities Investment Advisory analyst Tony Huang said.

According to the ADP report, the U.S. private sector's employment rose by 298,000 jobs in February, much higher than an earlier market estimate of a 190,000 increase.

"Based on the ADP statistics, the U.S. government could report solid non-farm payroll data Friday so that many investors simply dumped stocks for the moment ahead of a meeting scheduled by the Fed for March 14-15," Huang said.

Huang said that the electronics sector served as a barometer for the fall on the broader market as many heavyweights, including TSMC, faced stiff selling pressure. These large-cap stocks are liquid and it is easy for investors to sell when negative leads such as rate hikes weigh on market sentiment, he added.

TSMC, the most heavily weighted stock in Taiwan, had lost 1.34 percent to NT$184.50, with 14.32 million shares changing hands, while Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads for Apple Inc., had shed 1.21 percent to NT$89.60 as of 11:15 a.m.

Also in the electronics sector, integrated circuit packaging and testing services provider Advanced Semiconductor Engineering Inc. (???) had dropped 1.17 percent to NT$37.90, and IC designer MediaTek Inc. (???) had fallen 1.35 percent to NT$219.00.

"Falling international crude oil prices dealt another blow to the local equity market as petrochemical stocks suffered a plunge," Huang said, referring to a 5.4 percent fall in crude oil prices overnight on a spike in oil inventories in the U.S. market.

In the petrochemical sector, Formosa Plastics Corp. (??) had fallen 1.44 percent to NT$89.00, and Formosa Petrochemical Corp. (???) had dropped 2.34 percent to NT$104.50 as of 11:15 a.m.

"Although the weighted index came off an early low, it remains to be seen where the main board will find strong technical support in the short term, since the Fed leads could continue to affect market movement," Huang said.

Judging from Thursday's selling in large-cap stocks, Huang said that it is possible that foreign institutional investors were standing on the sell side.

Source: Focus Taiwan News Channel