Taiwan shares faced tremendous downward pressure in the morning session Saturday after investors took cues from a sharp decline on Wall Street overnight, dealers said.
Market sentiment turned very cautious amid rising fears over an interest rate hike by the U.S. Federal Reserve after a voting member of the Fed suggested that gradually tightening the U.S. central bank's monetary policy would be appropriate, they said.
Selling focused on the bellwether electronics sector in the wake of heavy losses suffered by high-tech stocks in the U.S. market overnight to push down the weighted index by more than 100 points, they added.
As of 10:45 a.m., the weighted index on the Taiwan Stock Exchange had fallen 121.83 points or 1.33 percent to 9,043.05 on turnover of NT$27.86 billion (US$882 million). The local equity market opened Saturday to make up for a lost trading session during the upcoming 4-day Mid-Autumn Festival holiday next week.
"Soon after the market opened, heavy pressure emerged to drag down the index sharply and selling is escalating, which showed that investors' confidence was badly hurt by the Fed rate hike concerns," Xin Cheng International Investment Consultant analyst Chang Chih-cheng said.
After Boston Fed President Eric Rosengren hinted the need to tighten U.S. monetary policy, the Down Jones Industrial Average closed almost 400 points, or 2.13 percent, lower, the S&P 500 index ended down 2.45 percent, and the tech-heavy NASDAQ index plunged 2.45 percent.
"Judging from the downturn suffered by large-cap stocks in the local electronics sector, and the current large turnover, I suspect that foreign institutional investor are on the sell side for the moment as they have started to lock in the gains they had built in recent sessions before the Fed takes action," Chang said.
The Fed is scheduled to hold a policymaking meeting on Sept. 20-21. Chang said that ahead of the meeting, volatility in the global markets is likely to continue.
As of 10:45 a.m., Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock in the local market, had shed 1.11 percent to NT$177.50 with 8.71 million shares changing hands after its American depositary receipts fell 4.03 percent on Wall Street overnight.
"TSMC reported a new high in sales for August, but the good fundamentals failed to fend off the impact resulting from foreign institutional selling," Chang said. "The stock could find technical support at around NT$174.50."
TSMC's consolidated sales totaled NT$94.31 billion, up 23.5 percent from a month earlier and also up 40.7 percent from a year earlier, the company announced Friday.
Chang said that worries over global sales of the latest iPhones -- the 4.7-inch iPhone 7 and the 5.5-inch iPhone 7 Plus -- continued to hurt Taiwanese suppliers to Apple Inc. in the morning session.
Among the falling Apple concept stocks, Largan Precision Co. (???), a smartphone camera supplier, lost 4.30 percent to NT$3,450.00, and metal casing maker Catcher Technology Co. (??) fell 2.69 percent to NT$235.00 as of 10:45 a.m.
In the financial sector, Fubon Financial Holding Co. shed 2.39 percent to NT$44.85 and Cathay Financial Holding Co. lost 1.98 percent to NT$39.65.
Source: Focus Taiwan News Channel