Taipei, Shares in Taiwan came under heavy pressure and closed below the 9,800 point mark amid concerns over fund exodus at a time of a strengthening U.S. dollar as well as worries over continued trade friction between the United States and China, dealers said.
Market sentiment has also been roiled by geopolitical tensions after the U.S. announced it intends to withdraw from a decades-old nuclear arms treaty with Russia, they said.
Selling was seen across the board with large cap stocks in focus, led by chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), pushing the main board down by almost 200 points by the end of trading, with the market more cautious after failing to reach 10,000 points in the past few sessions, they said.
The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex ended down 199.08 points, or 2 percent, at the day's low of 9,775.20, off an early high of 9,912.28, on turnover of NT$101.28 billion (US$3.27 billion).
The market opened down 0.62 percent as local investors took their cue from a fall on Wall Street, where the Dow Jones Industrial Average closed down more than 120 points or 0.5 percent overnight, to cut their holdings, dealers said.
Downward pressure on the main board escalated as investors saw sell-offs in other regional markets, such as Hong Kong, Shanghai and Tokyo, which triggered more selling in local shares to push the Taiex down to the day's low at the end of the session, they said.
"The magnitude of the plunge did surprise me," Mega International Investment Services Corp. analyst Alex Huang said.
"But, the sell-off showed that market sentiment has turned fragile even though the Dow fell only 0.5 percent."
"Fund outflows remain one of the biggest concerns to local investors as they saw the U.S. dollar index spiking due to fears over the quicker pace at which the U.S. Federal Reserve could raise interest rates," Huang said.
The U.S. dollar index, which tracks the currencies of Washington's six major trading partners, rose to 96.022 at one point Tuesday morning from 95.5 a session earlier.
Escalating trade tensions between the U.S. and China also prompted investors to park their funds in greenback-denominated assets as a safe haven, dealers said.
"Liquid large cap stocks, especially in the bellwether electronics sector, became the main victims of the selling as investors are looking to keep as much cash as possible for the moment to avoid more volatility down the road," Huang said.
TSMC, the most heavily weighted stock on the local market, fell 2.95 percent to close at the day's low of NT$230.00 with 32.76 million shares changing hands. TSMC's losses knocked the Taiex down by about 70 points.
Led by TSMC, the bellwether electronics sector closed down 2.42 percent and the semiconductor sub-index ended down 2.84 percent.
Among the falling tech stocks, United Microelectronics Corp., a smaller rival to TSMC, shed 2.67 percent to close at NT$12.75, integrated circuit designer MediaTek Inc. lost 3.39 percent to end at NT$214.00, and shares in smartphone camera lens supplier Largan Precision Co. dropped 4.85 percent to close at NT$3,335.00.
Selling spread to the non-high tech sector amid gloomy sentiment, Huang said.
In the old economy sector, shares in Asia Cement Corp. shed 6.46 percent to close at NT$34.00, textile maker Far Eastern New Century Corp. lost 3.11 percent to end at NT$31.20, and Formosa Petrochemical Corp. lost 2.03 percent to close at NT$120.50.
Among weakening financial stocks, E. Sun Financial Holding Co. lost 1.67 percent to close at NT$20.55 and Cathay Financial Holding Co. fell 1.99 percent to end at NT$49.30.
"The trade disputes between the U.S. and China shows no sign of being resolved anytime soon," Huang said. "Now, Washington's withdrawal the Intermediate-Range Nuclear Forces Treaty has made external factors more complicated."
According to the TWSE, foreign institutional investors sold a net NT$13.21 billion worth of shares on the main board Tuesday.
Source: Focus Taiwan News Channel