Taipei, Shares in Taiwan extended heavy losses Monday from a session earlier as investors remained concerned over escalating trade tensions between the United States and China after an announcement by U.S. Presidential Donald Trump last week that he plans to impose more tariffs on Chinese goods, dealers said.
Selling focused on the bellwether electronics sector, in particular Apple concept stocks, sending the main board down below 10,500 points at the end of trading as the new tariffs will cover smartphones and PCs, they said.
The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex ended down 125.63 points, or 1.19 percent, at 10,423.41, after moving between 10,418.25 and 10,542.49, on turnover of NT$128.22 billion (US$4.06 billion).
The market opened down 0.19 percent on followthrough selling from the previous session, when the Taiex ended down 1.70 percent in the wake of the new tariffs planned by Washington on Chinese goods, dealers said.
Tech heavyweights in Apple Inc's supply chain, such as contract chipmaker Taiwan Semiconductor Manufacturing Co., and iPhone assembler Hon Hai Precision Industry Co., saw their share price fall throughout the session amid worries that the trade war will affect shipments, they said.
On Aug. 1, Trump announced, in a series of tweets, that Washington is set to impose a 10 percent punitive tariff on an additional US$300 billion worth of Chinese goods, scheduled to come into effect on Sept. 1, after both sides resumed trade talks in Shanghai at the end of July but failed to make any significant progress. The tariffs could rise to 25 percent.
The punitive tariffs are expected to raise the costs of tech gadget brands to boost product prices, and in turn more expensive goods are expected to dampen consumer willingness to buy, hurting these brands and their suppliers, Concord Securities analyst Kerry Huang said.
It was no surprise that local investors continued to dump tech stocks, in particular in the Apple supply chain, today, Huang said.
As long as the trade disputes continue, global demand and even the world economy could be further affected at a time of already slow conditions.
Among the falling Apple concept stocks, TSMC, the most heavily weighted stock on the local market, fell 1.99 percent to close at NT$246.50 with 51.42 million shares changing hands.
The losses by TSMC, which serves as a supplier of processors for iPhone production, cost the Taiex about 50 points and sent the bellwether electronics sector down 1.70 percent.
Other losing Apple suppliers include Hon Hai, the world's largest contract electronics maker, shedding 3.58 percent to end at NT$72.80, and Pegatron Corp., a smaller iPhone assembler, fell 2.52 percent to close at NT$48.45,
Largan Precision Co., a supplier of smartphone camera lenses to Apple, appeared more resilient, down 0.39 percent to close at NT$3,875.00 before the stock goes exdividend Tuesday.
In the PC sector, which was also hit by trade dispute concerns, Asustek Computer Inc. lost 2.61 percent to close at NT$205.50, and rival Acer Inc. fell 1.64 percent to end at NT$18.00.
Trade worries also sent petrochemical stocks into a tailspin on weakening global demand with Formosa Petrochemical Corp. down 1.43 percent to close at NT$103.50, and Formosa Chemicals and Fibre Corp. down 1.52 percent to end at NT$90.60.
I think the losses suffered by those large cap stocks today came from selling by foreign institutional investors, Huang said.
According to the TWSE, foreign institutional investors sold a net NT$15.51 billion worth of shares on the main board Monday after net sales of NT$19.59 billion on Friday.
However, select old economy stocks focusing on domestic demand bucked the downturn, dealers said. Among them, food brand UniPresident Enterprises Corp. rose 0.26 percent to close at NT$77.00, and Hotai Motor Co., the local sales agent for Japan's Toyota Motor Corp., gained 2.32 percent to end at NT$441.00.
Huang said one more critical factor dragging down share prices in the region was the Chinese Yuan falling below the 7 yuan to US$1 mark.
The plunge suffered by the yuan against the greenback caused by the trade disputes also raises concerns over currency depreciation competition in the region, which could prompt foreign funds to exit the regional market, Huang said.
Source: Focus Taiwan News Channel