Taipei, Shares in Taiwan fell more than 100 points Wednesday, with earlier gains eroded by lingering concerns over the economic impact of the global spread of the novel coronavirus disease COVID-19, dealers said.
Profit taking selling intensified, in particular in the afternoon trading session, as investors rushed to dump their holdings in the bellwether electronics sector, pushing the broader market into negative territory at the end of the session, they said.
The weighted index on the Taiwan Stock Exchange (TWSE), or the Taiex, closed down 109.79 points, or 1.0 percent, at 10,893.75, after moving between 10,885.91 and 11,088.23, on turnover of NT$174.6 billion (US$5.8 billion).
The market opened up 0.18 percent in the wake of a strong rebound on U.S. markets, where the Dow Jones Industrial Average rose 1,167 points or 4.89 percent overnight, bouncing back from a 2,000 point plunge a session earlier on hopes that the U.S. government will come up with stimulus measures to bolster the economy, dealers said.
However, selling started to set in as the Taiex hit the day's high, with investors scrambling to cut their holdings in large cap stocks, such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), pushing the Taiex below 11,000 points by the end of the session, with investors remaining wary of the virus contagion, dealers added.
"While the spread of the virus in China has shown signs of stabilizing, infections in the United States and other countries have been on the rise," Taishin Securities Investment Advisory analyst Tony Huang said.
"That's why the Dow futures moved lower, pointing to a bad beginning on the spot market later today and volatility remains despite Tuesday's rebound."
The U.S. has reported about 1,000 confirmed COVID-19 cases and Washington has been the hardest-hit state. Many states have declared states of emergency with universities nationwide closing early or conducting online classes.
"Many investors fear the virus spread will seriously affect consumption in the U.S., the largest economy in the world, and in turn, global demand will be hurt, representing an unfavorable development for Taiwan's export-oriented economy," Huang said, adding "It was no surprise that local investors locked in their earlier gains today."
The electronics sector, which depends heavily on exports, fell 1.37 percent to close at the day's low of 477.32 after coming off a high of 489.05, led by TSMC, the most heavily weighted stock on the local market, which lost 1.63 percent to close at the day's low of NT$302.00, off a high of NT$310.50.
TSMC's losses also sent the semiconductor sub-index 1.74 percent lower.
Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization, dropped 1.01 percent to end at NT$78.60.
PC brand Asustek Computer Inc. fell 1.25 percent to end at NT$197.50, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., lost 2.34 percent to close at NT$4,385.00.
Old economy stocks were generally hurt by fears over weaker global demand and for the moment sales in the energy market, dealers said.
Despite a rebound in international crude prices overnight, petrochemical stocks on the local market gave up their earlier gains with Formosa Petrochemical Corp. down 1.10 percent to close at NT$80.70, Formosa Chemicals & Fibre Corp. down 0.13 percent ending at NT$77.50, and Formosa Plastics Corp. down 0.11 percent to close at NT$88.90.
Bucking the downturn on the local main board, shares in food brand Uni-President Enterprises Corp. rose 0.69 percent to close at NT$72.90 and Asia Cement Corp. added 1.31 percent to end at NT$42.55.
In the financial sector, which fell 0.59 percent, Cathay Financial Holding Co. fell 1.03 percent to close at NT$38.60, Mega Financial Holding Co. lost 0.48 percent to end at NT$31.20, and Fubon Financial Holding Co. closed down 0.47 percent at NT$42.15.
"As long as the virus contagion continues, it is unlikely for the global financial markets to leave volatility behind," Huang said, adding "For Taiwan, it is hard to say where the Taiex will find strong technical support."
According to the TWSE, foreign institutional investors sold a net NT$20.76 billion worth of shares on the main board Wednesday after NT$8.62 billion on Tuesday.
Source: Focus Taiwan News Channel