Taipei, Sept. 18 (CNA) Shares in Taiwan came under pressure Tuesday, ending the day below the 10,800 point mark as investors rushed to dump their holdings in the wake of an announcement by Washington that it will impose tariffs on US$200 billion worth of Chinese goods, dealers said.
The bellwether electronics sector drove the broader market lower as selling focused on major Taiwanese suppliers to Apple Inc. amid fears that trade friction between Washington and Beijing will escalate to further affect Taiwanese suppliers to U.S. brands in case of China's retaliation, they said.
However, old economy and financial stocks were more resilient, helping the local main board fend off downward pressure faced by tech firms throughout the session, dealers said.
The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex closed down 68.40 points, or 0.63 percent, at 10,760.21, after moving between 10,750.81 and 10,806.56, on turnover of NT$116.96 billion (US$3.79 billion).
The market opened down 0.32 percent as investors took their cue from a falling Wall Street, where the Dow Jones Industrial Average closed down 0.32 percent and the tech-savvy Nasdaq index ended down 1.43 percent overnight, dealers said.
Selling on the local main board escalated with the high tech sector in focus, led by "Apple concept stocks," with investor sentiment hurt by the latest announcement from Washington that it will impose a 10 percent tariff on US$200 billion worth of Chinese merchandise starting from Sept. 24. The tariffs are expected to rise to 25 percent by the end of the year.
"There are no signs that trade disputes between the U.S. and China will be resolved anytime soon," Mega International Investment Services Corp. analyst Alex Huang said.
"After the tariff targeting US$200 billion of Chinese goods, many investors are holding their breath to see whether (U.S. President) Trump will impose tariffs on the additional US$267 billion worth of Chinese goods as planned, Huang said. "It will trigger an all-out trade war between the top two economies in the world."
Huang said there are fears that China will retaliate after the latest tariffs, which could have a negative impact on Taiwanese suppliers to U.S. tech brands.
"So, Apple suppliers in Taiwan became the largest victims of trade tensions between Washington and Beijing on the main board due to the intertwined business ties between the three economies," Huang said.
Among the falling Apple concept stocks, smartphone camera lens supplier Largan Precision Co., the most expensive stock in Taiwan, shed 10 percent, the maximum daily decline, to close at NT$3,860.00.
The selling also reflected worries over Largan shipments for the rest of this year after a research report said the latest more affordable iPhone XR, which is equipped with a one single lens camera, could account for 55-60 percent of the total iPhone sales.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, lost 1.36 percent to close at NT$254.50 and iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, fell 2.57 percent to end at NT$75.80.
Led by theses major Apple suppliers, the bellwether electronics sector closed down 1.57 percent.
"The silver lining was that non-tech stocks remained resilient, preventing the broader market from falling further today as investors sought a safe haven to park their funds," Huang said. "It is possible that the buying of these stocks partly came from government-led funds to support the Taiex."
In the old economy sector, shares in food brand Uni-President Enterprises Corp. rose 3.70 percent to close at NT$78.40, China Steel Corp., the largest steel supplier in Taiwan, gained 2.04 percent to end at NT$25.00, and Asia Cement Corp. rose 1.65 percent to close at NT$37.00.
In the financial sector, Mega Financial Holding Co. gained 1.52 percent to close at NT$26.80, and E. Sun Financial Holding Co. added 0.45 percent to end at NT$22.45. Washington and Beijing are scheduled to hold trade talks later in the month. "We have to watch closely how the negotiations proceed since what happens will move the global financial markets," Huang said.
Despite the fall in the Taiex, foreign institutional investors bought a net NT$1.76 billion worth of shares on the main board Tuesday, according to the TWSE.
Source: Focus Taiwan News Channel