Taipei: Shares in Taiwan closed down more than 100 points Monday with local investors shocked by heavy losses on the U.S. markets the previous two trading sessions, dealers said.
In the wake of the rapid global spread of the novel coronavirus (COVID 19), selling focused on the bellwether electronics sector, while the main board received some technical support from bargain hunters during the trading session to recover part of its earlier losses and return to the 11,100 point mark, they said.
The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex ended down 121.71 points, or 1.08 percent, at 11,170.46, after moving between 11,049.85 and 11,282.05, on turnover of NT$199.657 billion (US$ 6.6 billion).
The market opened down 0.95 percent after the Dow Jones Industrial Average dropped about 1,500 points on Thursday and Friday following a 2,000 point decline between Monday and Wednesday, in the wake of a rapid rise in confirmed COVID 19 cases outside China. The local main board was closed Friday for a public holiday.
In the early morning session, selling escalated to push the Taiex below the nearest technical support at around 11,057, the 240 day moving average, before bargain hunters turned active to take advantage of select battered tech stocks, in particular in the Apple Inc. supply chain, which helped the Taiex move closer to the previous closing level before noon, dealers said.
However, selling re emerged in the afternoon session as investors remained cautious about the economy at home and abroad at a time when the spread of COVID 19 shows no signs of slowing down, they said.
"Market sentiment remains dictated by the development of the epidemic," Mega International Investment Services Corp. analyst Alex Huang said. "It was no surprise that the local main board appeared so volatile during the entire session."
So far, more than 88,000 confirmed cases have been reported worldwide after the epidemic broke out in Wuhan, China, at the end of December, killing over 3,000 with the majority in China. South Korea has reported more than 4,200 confirmed cases, the largest outside China, leaving 24 dead.
"The spread of the virus is interrupting the global supply chain in the electronics sector, which has raised concerns over production worldwide," Huang said, referring to China and South Korea as a manufacturing hub for the tech industry.
The local high tech sector remained a focus of heavy selling, although some large cap stocks in the Apple supply chain recovered at one point from their lows on bargain hunting, Huang said. "But, such bargain hunting failed to last to the end of the session amid the virus fears."
As a supplier of processors to Apple, contract chipmaker Taiwan Semiconductor Manufacturing Co.(TSMC), the most heavily weighted stock on the local market, fell 1.58 percent to close at NT$311.00 after moving between NT$308.00 and NT$317.00, with 79.71 million shares changing hands.
iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization, fell 1.37 percent to end at NT$79.20 after moving between NT$78.10 and NT$80.30, and Largan Precision Co., a supplier of smartphone camera lenses to Apple, dropped 1.13 percent to end at NT$4,380.00 after hitting a high of NT$4,465.00 and a low of NT$4,365.00.
The bargain hunting among Apple concept stocks came as investors took their cue from a news report in which Apple CEO Tim Cook said the coronavirus spread was "a temporary condition, not a long term kind of thing. Apple is fundamentally strong."
Bucking the downtrend on the local main board, integrated circuit designer MediaTek Inc. rose 0.83 percent to close at NT$363.00.
Huang said old economy and financial stocks remained in the doldrums also due to concerns over COVID 19 contagion.
Among the falling old economy stocks, shares in food brand Uni President Enterprises Corp. fell 2.73 percent to close at NT$71.20, Eclat Textile Co. shed 2.50 percent to end at NT$351.00, Formosa Chemicals and Fibre Corp. lost 1.46 percent to close at NT$81.00, and Formosa Petrochemical Corp. dropped 1.28 percent to end at NT$85.00.
In the financial sector, which closed down 1.34 percent, Cathay Financial Holding Co. lost 1.37 percent to close at NT$39.50, Mega Financial Holding Co. fell 1.24 percent to end at NT$31.95, and Fubon Financial Holding Co. dropped 1.12 percent to close at NT$43.95.
"While the Taiex saw strong technical support at around 11,057, the room for gains caused by any technical rebound will be limited since high technical hurdles are expected at around 11,462, the 120 day moving average," Huang said.
According to the TWSE, foreign institutional investors sold a net NT$19.28 billion worth of shares on the main board Monday.
Source: Focus Taiwan News Channel