Taipei: Shares in Taiwan experienced a significant drop of more than 750 points Friday, primarily driven by the electronics sector. This decline comes amid increasing fears of an interest rate hike by the U.S. Federal Reserve following reports from Washington indicating the fastest monthly growth in the producer price index since May, coupled with a surge in international crude oil prices.
According to Focus Taiwan, the Taiex, which is the benchmark index of the Taiwan Stock Exchange, closed down 755.64 points, or 1.61 percent, at 46,184.85. Throughout the day, it fluctuated between 45,942.44 and 46,651.21, with a total turnover of NT$721.91 billion (US$22.84 billion). Analyst Kevin Su from Hua Nan Securities noted that inflation concerns have driven U.S. Treasury yields higher, amplifying fears of a Fed rate hike. Consequently, interest rate-sensitive tech stocks in the U.S. lost momentum, which similarly affected their Taiwanese counterparts.
The Philadelphia Semiconductor Index's 2.66 percent drop, along with a 1.68 percent fall in the American depositary receipts of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), resulted in TSMC shares in Taiwan declining by 1.63 percent, closing at NT$2,410.00. This contributed approximately 320 points to the Taiex's decline. Other significant losses in the tech sector included MediaTek Inc. falling by 2.86 percent to NT$4,585.00, Nanya Technology Corp. dropping by 4.27 percent to NT$493.00, and ASE Technology Holding Co. decreasing by 4.92 percent to NT$618.00. However, Quanta Computer Inc., another AI server producer, managed a slight increase of 0.15 percent to close at NT$336.50.
Su highlighted that funds shifted towards financial stocks as safe havens, providing some support to the broader market. With the financial index rising by 1.12 percent, E. Sun Financial Holding Co. saw a 3.00 percent increase to NT$46.30, and Mega Financial Holding Co. gained 3.61 percent, closing at NT$51.80. Meanwhile, Fubon Financial Holding Co. and Cathay Financial Holding Co. remained steady at NT$148.50 and NT$110.50, respectively.
Dealers pointed out that old economy stocks faced pressure due to Fed rate hike concerns, with raw material stocks particularly affected. Among them, China Steel Corp. fell 1.05 percent to NT$18.90, and Chung Hung Steel Corp. decreased by 1.48 percent to NT$16.65. Longchen Paper and Packaging Co. and Cheng Loong Corp. also experienced declines, closing at NT$10.45 and NT$24.80, respectively.
Su emphasized the significance of the upcoming U.S. consumer price index data for August, which is expected later today. This data is crucial for the Fed's decision-making process. Following the producer price index data, the probability of the Fed raising rates by 25 basis points next week increased to around 70 percent.
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$89.27 billion worth of shares on the main board Friday.