Taipei: Shares in Taiwan tumbled almost 700 points to close at the day’s low Tuesday as sell-off was triggered by heavy losses on the U.S. markets overnight amid fears over the U.S. Federal Reserve’s hawkish stance and stretched tech stocks, dealers said. The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 691.19 points, or 2.52 percent, at 26,756.12, off a high of 27,310.40. Turnover totaled NT$640.39 billion (US$20.51 billion).
According to Focus Taiwan, the major U.S. indexes, such as the Nasdaq, fell below their critical technical support of the 50-day moving average on Monday. U.S. stock futures were also falling, pointing to an ugly opening on the spot markets Tuesday. Moore Securities Investment Consulting analyst Adam Lin noted that many investors feared a major technical pullback, prompting them to trim their holdings.
In addition to technical reasons, local sentiment has turned cautious, particularly after several Fed officials made hawkish comments about interest rates. This has reduced hopes of a rate cut, placing electronics heavyweights under pressure. Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the market, shed 2.77 percent to close at the day’s low of NT$1,405.00, contributing about 320 points to the Taiex’s fall.
Other major stocks also faced declines. iPhone assembler and AI server maker Hon Hai Precision Industry Co. dropped 2.54 percent to end the day at NT$230.00, while Quanta Computer Inc. lost 2.17 percent to close at NT$270.00. Largan Precision Co., a smartphone camera lens supplier to Apple Inc., lost 2.82 percent to end at NT$2,070.00. However, Yageo Corp., the world’s third-largest multi-layer ceramic capacitor maker, rose 1.10 percent to close at NT$229.00.
Adam Lin remarked that panic selling was observed across the board, including nontech stocks. In the old economy sector, China Steel Corp. lost 1.11 percent to close at NT$17.75, and Tung Ho Steel Corp. shed 1.81 percent to end at NT$59.80. King’s Town Construction Co. lost 2.08 percent to close at NT$39.95, and Sakura Development Co. dropped 2.28 percent to end at NT$45.10. Formosa Plastics Corp. shed 3.71 percent to close at NT$41.50, but Nan Ya Plastics Corp. ended up 1.42 percent at NT$57.30.
In the financial sector, Fubon Financial Holding Co. lost 2.51 percent to close at NT$89.50, and Cathay Financial Holding Co. ended down 0.77 percent at NT$64.80. Lin stated that the nearest technical support for the Taiex is near the 60-day moving average of 26,330 points, warning that if the index fails to hold above that level, further losses will follow.
According to TWSE, foreign institutional investors sold a net NT$48.54 billion worth of shares on the main board Tuesday.