Taipei, Shares in Taiwan came under pressure Monday, closing down almost 100 points as market sentiment was hit by escalating fears over trade friction between the United States and China, dealers said.
Selling was seen across the board during the session led by large cap stocks in both the electronics and non-tech sectors, pushing the local main board down about 1 percent at the end of the session, dealers added.
Shares in select firms rolling out passive components, such as chip resistors and multi-layer ceramic capacitors (MLCC), in the electronics sector fell sharply, while contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) was more resilient, preventing the broader market from falling further, dealers said.
The weighted index on the Taiwan Stock Exchange (TWSE), or the Taiex, ended down 99.72 points, or 0.90 percent, at 10,964.22, after moving between 10,952.85 and 11,097.11, on turnover of NT$109.98 billion (US$3.58 billion).
The market opened up 0.22 percent on a technical rebound from the previous session, when the Taiex closed down 0.27 percent, and rose to the day's high in the early morning session, dealers said.
However, selling soon set in focusing on market heavyweights in the electronics sector and downward pressure spread to old economy and financial stocks as investors took their cue from the weakness of other regional markets such as Shanghai and Hong Kong at a time when Washington is set to impose additional tariffs on more Chinese goods, they said.
"Local investors were motivated by a report from Bloomberg over the weekend about the planned tariffs to be imposed on more Chinese goods targeted by the Trump administration," Concord Securities analyst Kerry Huang said.
According to the Bloomberg report, U.S. President Donald Trump told aides he supports moving forward with proposed tariffs on an additional US$200 billion in Chinese merchandise. The trade dispute has raised fears that trade ties between the U.S. and China will worsen, impacting the global economy and demand, dealers said.
"Not only in Taipei, but also in other regional markets such as Shanghai and Hong Kong, there are fears over the escalation of trade disputes between the world's top two economies," Huang said. "The market fears that the new tariffs will be implemented by the end of this month."
Amid fears over a trade war between the U.S. and China, many investors preferred to stay on the sidelines, which has kept daily turnover low in recent sessions, Huang said.
Selling in passive electronics components showed a retreat by local investors as they have recently favored such stocks. "Today, taking trade concerns as an excuse, local investors unloaded their stocks," he added.
Among falling passive component stocks, shares in Yageo Corp. shed 10 percent, the maximum daily decline, to close at NT$629.00, and Wahsin Technology Corp. also lost 10 percent to end at NT$283.50.
In the electronics sector, integrated circuit packaging and testing services provider ASE Technology Holding Co. lost 1.33 percent to close at NT$74.30, and dynamic random access memory (DRAM) chip maker Nanya Technology Corp. dropped 4.30 percent to end at NT$66.70.
"The silver lining was that TSMC ended above the previous closing level or the Taiex would have suffered steeper losses," Huang said, adding that optimism over the commanding position of the world's largest contract chipmaker continued to lend support to the stock.
In the non-tech sector, shares in Formosa Plastics Corp. fell 1.33 percent to close at NT$111.00, and Formosa Chemical & Fibre Corp. shed 2.44 percent to end at NT$120.00, while food brand Uni-President Enterprises Corp. lost 1.80 percent to close at NT$76.20, and Taiwan Cement Corp. ended down 2.36 percent at NT$41.35.
"Due to current weak market sentiment, the main board could see more losses down the road," Huang said, adding that "The Taiex could find technical support at around the 240-day moving average of 10,794 points."
Source: Focus Taiwan News Channel