Taipei, March 6 (CNA) Shares in Taiwan moved sharply lower Friday, down almost 200 points, as market sentiment was hit by a plunge on the U.S. markets overnight amid escalating concerns over the global spread of COVID-19, dealers said.
A continued spike in confirmed COVID-19 cases worldwide led investors to dump their holdings in large-cap stocks, in particular in the bellwether electronics sector throughout the session on demand worries, while selling was also seen among non-tech stocks, which added downward pressure on the broader market, the dealers said.
The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, closed down 193.01 points, or 1.68 percent, at 11,321.81, after moving between 11,310.32 and 11,471.36, on turnover of NT$149.06 billion (US$4.97 billion).
The market opened down 0.38 percent and selling increased to send the Taiex to the day's low in the mid-morning session as investors here were shocked by the dive on the U.S. markets, where the Dow Jones Industrial Average closed down about 1,000 points, or 3.58 percent, the dealers said.
Funds exited the U.S. equity market to flock to the bond market for safe haven as the death toll from infections in the United States rose to 12 among more than 230 confirmed cases, which triggered worries over the U.S. economy, the largest in the world, if the contagion worsens, they said.
Selling focused on tech heavyweights such as contract chipmaker Taiwan Semiconductor Manufacturing Co. as investors took cues from the sell-off in their American depositary receipts overnight, the dealers said.
"Many investors were wondering that if the virus spread in the U.S. continues, many American consumers will just stay at home and stop spending, which could deal a blow to global demand and eventually the global economy," equity market analyst Andy Hsu said.
In reflection of the worsening contagion in the U.S., the Chicago Board Options Exchange (CBOE) Volatility Index (VIX), which is widely considered an ideal gauge of fear in the market, soared about 14 percent overnight, which drove investors here to the sell side, Hsu said.
According to the TWSE, foreign institutional investors sold a net NT$28.82 billion-worth of shares on the main board Wednesday.
"Large-cap tech stocks fell victim to fears over the economy," Hsu said. "Investors simply cut their holdings in TSMC, the most heavily weighted stock in the local market."
TSMC, the world's largest contract chipmaker, lost 1.70 percent to close at the day's low of NT$315.00, with about 51.37 million shares changing hands, as investors took cues from a 2.37 percent decline in the company's ADRs on the U.S. markets Thursday.
TSMC's losses contributed a roughly 70-point decline to the Taiex and sent the electronics sector and the semiconductor sub-index 1.84 percent and 2.16 percent lower, respectively.
Led by TSMC's downturn, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization, fell 2.30 percent to close at NT$80.80, and integrated circuit packaging and testing service provider ASE Technology Holding Co. shed 2.85 percent to end at NT$71.50.
Appearing relatively resilient, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc. lost only 0.76 percent to close at NT$4,565.00. "I suspect government-lend funds picked up bargains like Largan in a bid to prevent the broader market from falling further," Hsu said.
Investors also punished old economy and financial stocks, Hsu said, citing economic concerns.
Among the falling old economy stocks, food brand Uni-President Enterprises Corp. lost 1.22 percent to close at NT$72.70, Formosa Plastics Corp. fell 2.04 percent to end at NT$91.40, Nan Ya Plastics Corp. dropped 2.15 percent to close at NT$68.20 and Eclat Textile Co. shed 4.49 percent to end at NT$351.00.
In the financial sector, which fell 1.57 percent, Mega Financial Holding Co. lost 1.37 percent to close at NT$32.45, Cathay Financial Holding Co. fell 1.62 percent to end at NT$39.50 and Fubon Financial Holding Co. dropped 2.10 percent to end at NT$39.50.
"The U.S. markets' volatility pushed down the Taiex below the nearest technical support level at around 11,345 today so the main board turned technically weaker," Hsu said.
"We have to keep a close eye on how the virus will evolve worldwide and how the global markets will react," Hsu said.
Source: Focus Taiwan News Channel