Taipei, Shares in Taiwan fell Thursday, dropping below the 9,700 point mark, amid escalating worry that the U.S. Federal Reserve will raise its key interest rates at its next policymaking meeting next week, dealers said.
The bellwether electronics sector was hard hit by fears that foreign investors would continue to move funds out of the region due to a stronger U.S. dollar, dealers said.
The broader market was also affected by heavy selling in raw material stocks, particularly in the petrochemical sector, dealers said.
The weighted index on the Taiwan Stock Exchange closed down 94.84 points, or 0.97 percent, at 9,658.61, after moving between 9,650.32 and 9,743.78. Turnover totaled NT$88.56 billion (US$2.86 billion) during the session.
The market opened down 0.14 percent in a knee-jerk reaction to a weaker Wall Street, where the Dow Jones Industrial Average fell 0.33 percent and the S&P 500 index dropped 0.23 percent overnight, although the Automatic Data Processing Inc. (ADP) data showed the better than expected job enrollment in the U.S. private sector.
Selling escalated on the local main board in reflection of a weak Taiwan dollar, as foreign investors continued to move funds out of the country, betting on a stronger greenback if the Fed decides to raise interest rates next week, dealers said.
With the release of the U.S. ADP jobs report, the market is now looking at a 90 percent chance that the Fed will decide to hike interest rates at its March 14-15 meeting, dealers said.
"Looking at the losses on other regional markets, it was no surprise that the Taiwan market fell more than 100 points at one point today as market sentiment was hurt by the Fed's leads," Ta Ching Securities analyst Andy Hsu said, referring to the downturn in markets like Hong Kong and Singapore.
"Judging from the losses of large-cap stocks today, I think the selling came largely from foreign institutional investors," Hsu said. According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$10.61 billion worth of shares on the main board Thursday.
The bellwether electronics sector closed down 0.86 percent after the world's largest contract chip maker Taiwan Semiconductor Manufacturing Co. (???), the most heavily weighted stock on the local market, fell 1.34 percent to end at NT$184.50 with 28.49 million shares changing hands.
Also in the high-tech sector, United Microelectronics Corp. (??), the world's second largest contract chip maker, dropped 1.22 percent to close at NT$12.10, and integrated circuit packaging and testing services provider Advanced Semiconductor Engineering Inc. (???) finished 1.43 percent lower at NT$37.80.
Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads for Apple Inc., shed 1.54 percent to close at NT$89.30.
In the wake of a 5.4 percent plunge in international crude oil prices overnight after a spike in oil inventories in the U.S. market, Formosa Plastics Corp. (??) fell 1.99 percent to close at NT$88.50, Nan Ya Plastics Corp. (??) dropped 2.23 percent to end at NT$70.20, and Formosa Petrochemical Corp. (???) shed 2.80 percent to finish at NT$104.00.
"Technical support on the main board will depend on the fluctuations of the Taiwan dollar, Hsu said. "The local currency's movement will hinge on whether foreign investors continue to exit the local market."
The U.S. dollar closed up NT$0.155 at NT$31.020 against the Taiwan dollar Thursday on fund outflows.
Source: Focus Taiwan News Channel