TWSE market cap plunges over 4.5% this week

Taipei, Market capitalization of the Taiwan Stock Exchange (TWSE), the local main board, tumbled more than 4.5 percent this week after share prices came under great pressure amid volatility on Wall Street as well as lingering concerns over trade frictions between the United States and China.

Worries over a speedy interest rate hike cycle carried out by the U.S. Federal Reserve to push up the U.S. dollar, which would lead to further fund outflows out of the region, were also cited as a cause for the sharp decline in local share prices and market value, dealers said.

This week, another volatile week for local equities, the market cap of Taiwan's local main board shrank by NT$1.37 trillion (US$44.19 billion) or 4.56 percent from a week earlier to NT$28.6 trillion after the benchmark weighted index on the TWSE or the TAIEX shed 430.08 points or 4.34 percent from a week earlier to end at 9,489.18 on Friday.

Friday's closing level was the lowest since Feb. 3, 2017, when the TAIEX finished at 9,455.56 points.

Also in the week, the FTSE TWSE Taiwan 50 Index, which consists of the 50 largest companies in Taiwan, fell 372.54 points or 4.87 percent, while the Formosa Stock Index, which is comprised of stocks listed on the main board and the over-the-counter market, lost 506.58 points, or 4.50 percent in the week.

Led by the heavy losses suffered by the Dow Jones Industrial Average and the tech-savvy Nasdaq, foreign institutional investors continued to dump their holdings on the local main board, which sent the TAIEX into a tailspin, while the government-led funds were said to have entered the trading floor and bought bargains to prevent local share prices from falling further.

In the week, the Dow fell 3 percent and the Nasdaq index lost 3.8 percent, while the S&P 500 index shed 4 percent.

With sentiment toward the market outlook weakening, foreign institutional investors sold a net NT$31.21 billion worth of shares on the main board this week.

So far this month, foreign institutional investors has registered a net sell of NT$153.17 billion, with the TAIEX tumbling 1,517.16 points or 13.78 percent.

This week, foreign institutional selling focused on liquid large-cap stocks in the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co., (TSMC), the most heavily weighted stock in the local market, to cash in on their earlier gains.

For its part, TSMC shares shed 6.35 percent to close at NT$221.00 this week. Due to TSMC's heavy losses, the bellwether electronics index closed down 5.06 percent and the semiconductor sub-index ended down 6.67 percent.

During the week, the total turnover on the main board hit NT$516.49 billion with the electronics component sector accounting for 22.25 percent, the largest ratio, ahead of the semiconductor sector (20.97 percent) and the optoelectronics sector (11.75 percent).

Analysts said the local equity market is expected to continue to see more losses down the road as the TAIEX fell below the nearest technical support at around the 9,500 points, which has made the main board more fragile.

Source: Focus Taiwan News Channel