Taipei: Shares in Taiwan closed significantly lower, experiencing a drop of over 650 points Thursday. The decline was primarily triggered by a surge in crude oil prices amid ongoing Middle East tensions and remarks from the U.S. Federal Reserve regarding rising inflation concerns, according to market dealers.
According to Focus Taiwan, the Taiex, Taiwan's benchmark index on the stock exchange, plummeted by 658.90 points or 1.92 percent, closing at 33,689.68. The index fluctuated between 33,663.78 and 34,279.12 throughout the day, with a total turnover of NT$845.71 billion (US$24.49 billion). Alex Huang, an analyst at Meta International Investment Services, noted that escalating crude oil prices have unsettled market sentiment due to the unresolved conflict in the Middle East.
Brent crude oil prices, which serve as a global benchmark, surged nearly 4 percent overnight, surpassing US$107 per barrel amid increased threats from Israel and Iran to target oil facilities in the Middle East. Furthermore, statements from Federal Reserve Chair Jerome Powell about rising inflation added to investor unease. Although the Fed maintained interest rates, Powell's cautionary remarks about economic pressures contributed to the market's negative outlook.
The fragile sentiment particularly impacted large tech stocks, causing the Taiex to fall below its five-day moving average technical support at around 33,729 points. Taiwan Semiconductor Manufacturing Co. (TSMC), a major player accounting for over 40 percent of total market value, saw its shares drop by 2.89 percent to NT$1,850.00, contributing approximately 440 points to the Taiex's decline. This also resulted in the electronics index falling by 2.02 percent.
Other tech companies, including MediaTek Inc. and Nanya Technology Corp., experienced declines of 2.89 percent and 5.80 percent, respectively. However, Global Unichip Corp., a subsidiary of TSMC, managed to rise by 3.78 percent, closing at NT$2,610.00.
In wider tech sector movements, Hon Hai Precision Industry Co. and Delta Electronics Inc. also faced losses, closing at NT$205.00 and NT$1,455.00, respectively. Huang observed that there was a broad sell-off driven by concerns that high oil prices might negatively impact the economy, potentially leading to systemic risks.
The old economy sector was not spared, with Eclat Textile Co. and Makalot Industrial Co. seeing declines. Nan Ya Plastics Corp. fell in line with its subsidiary Nanya Technology, while Formosa Plastics Corp. saw a slight gain. The financial sector also experienced a downturn, with Cathay Financial Holding Co. and Fubon Financial Holding Co. both recording losses.
The Taiwan Stock Exchange reported that foreign institutional investors sold a net NT$90.95 billion of shares on the main board Thursday, further contributing to the downward pressure on the market.