Taipei, Taiwan shares moved lower on Tuesday morning as investors here reacted to a plunge on Wall Street overnight amid worries over a looming trade war between Washington and Beijing as well as further volatility among U.S. tech stocks, dealers said.
The bellwether electronics sector led the downturn, with selling focusing on select large cap stocks, such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC).
Defensive telecom stocks and select old economy stocks showed resilience, however, preventing the broader market from falling further, they said.
As of 11:52 a.m., the weighted index on the Taiwan Stock Exchange, the Taiex, had fallen 90.72 points or 0.83 percent to 10,797.55 on turnover of NT$76.71 billion (US$2.64 billion).
The Taiex fell by as many as 112.82 points at one point in the morning after the Dow Jones Industrial Average dove 1.90 percent and the tech-heavy NASDAQ index plunged 2.74 percent overnight.
But with the Taiex falling below the 10,800-point mark, some bargain hunting emerged to cap the losses, dealers said.
"It seemed that the local market was somehow resilient compared with the heavy losses suffered by Wall Street overnight," KGI Securities analyst Phil Chu said.
"But due to the steep slide in the Nasdaq, the local electronics sector still drove today's downturn, led by TSMC," Chu said.
As of 11:52 a.m., TSMC, the most heavily weighted stock in the local market, was down 1.22 percent at NT$243.50, with 21.39 million shares changing hands.
Led by TSMC, the electronics sector was down 1.13 percent and the semiconductor sub-index was 1.21 percent lower.
"Whether the market will turn stable will depend on when TSMC will return to an upward path," Chu said. "Foreign institutional investors have largely stood on the sell side for TSMC in recent sessions, so their attitude toward the stock will be critical."
According to Chu, foreign institutional investors have sold a net 20 million TSMC shares in the past five trading sessions.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, had lost 0.91 percent to NT$87.30, and Largan Precision Co., a smartphone camera lens supplier to Apple Inc., had fallen 1.41 percent to NT$3,140.
Telecom stocks outperformed the broader market, with Chunghwa Telecom Co. down 0.44 percent at NT$112.00 and Taiwan Mobile Co. unchanged at NT$110.00.
Formosa Chemicals & Fibre Corp. also appeared resilient, remaining unchanged at NT$107.50.
"Although the market came off its early low, Wall Street's volatility made it likely that the Taiex will hover around 10,800 points for the rest of the session," Chu said.
"Sentiment is very cautious for the moment, especially ahead of the upcoming five-day Tomb Sweeping Festival holiday as investors fear negative leads will come out of global markets during the break," Chu said.
Chu expected turnover for Tuesday could expand to about NT$115 billion, from NT$103 billion seen Monday.
Source: Focus Taiwan News Channel