Taipei, Shares in Taiwan took another beating on Tuesday, falling more than 500 points on expanded turnover in reaction to a nearly 5 percent fall in the Dow Jones Industrial Average overnight, dealers said.
With concerns that the U.S. Federal Reserve may raise key interest rates faster than expected, investors here rushed to dump large-cap stocks, especially electronics heavyweights such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), they said.
The weighted index on the Taiwan Stock Exchange closed down 542.25 points, or 4.95 percent, at 10,404.00, after moving between 10,300.40 and 10,761.01, on turnover of NT$240.88 billion (US$8.19 billion).
The turnover was the highest in a single session in nearly nine years and was far above the NT$130 billion in turnover seen on Monday, when the Taiex fell 1.62 percent.
The market opened down 1.69 percent on Tuesday in reaction to the Dow's 4.6 percent plunge overnight amid rising concerns of faster rate hikes by the Fed in view of better-than-expected job data for January, dealers said.
Selling quickly escalated across the board, with the Taiex soon falling below the nearest point of technical resistance at around 10,386 points, the 240-day moving average, they said.
Renewed buying emerged late in the session to help the broader market rebound, although Tuesday's losses were still the largest since March 13, 2000, when the market suffered a 617.65-point 6.18 percent tumble, dealers said.
"Today's turnover topped the NT$200 billion mark, indicating many investors rushed to dump their holdings in a panic," KGI Securities analyst Phil Chu said.
"The losses reflected the plunge on Wall Street, with selling focusing on market heavyweights, in particular the bellwether electronics sector."
In the electronics sector, which fell 5.14 percent, TSMC, the most heavily weighted stock in the local market, ended down 5.53 percent at NT$239.00, with 102.35 million shares changing hands.
Among other falling tech stocks, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization in Taiwan, lost 3.88 percent to end at NT$89.20.
Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., shed 10 percent, the maximum daily decline allowed, to end at NT$3,420.00 after the company reported a 28 percent month-on-month fall in consolidated sales for January.
"Selling spread to the non-high-tech sector to add more downward pressure on the broader market throughout the day," Chu said.
In the financial sector, which lost 4.67 percent, Fubon Financial Holding Co. fell 5.57 percent to close at NT$49.20, and Cathay Financial Holding Co. dropped 6.10 percent to end at NT$50.80.
Among the weakening old economy stocks, China Steel Corp., the largest steel maker in Taiwan, fell 3.67 percent to close at NT$23.60, Formosa Plastics Corp. dropped 3.78 percent to end at NT$96.70, and Formosa Chemicals & Fibre Corp. shed 4.19 percent to close at NT$103.00.
"I suspect that buying late in the session that prevented the broader market from falling further came from government-led funds, helping the Taiex recover some of its earlier losses to end above the 240-day moving average," Chu said.
But there is no sign that Taiwan's stock market will stage a quick rebound from the big losses, Chu said.
"Dow futures continued to fall in after-hours trading, so it's possible the U.S. market will keep falling after it opens on Tuesday. If so, the local market is likely to suffer additional losses," Chu said.
Source: Fucus Taiwan