Taipei, Taiwan shares took a beating Tuesday morning as investors reacted to falls in markets in the United States to reduce their holdings, dealers said.
Selling focused on large cap stocks, especially in the electronics sector, where contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) led the downturn amid ongoing concerns over the impact of trade friction between the U.S. and China, they said.
Taiwan's stock market came under heavy pressure soon after the market opened, and the selling continued during the morning.
As of 10:50 a.m., the Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), had fallen 135.67 points, or 1.36 percent, to 9,838.61 on turnover of NT$51.11 billion (US$1.65 billion).
That was after the Dow Jones Industrial Average closed about 127 points, or 0.5 percent, lower on Monday.
Among the falling heavyweights, TSMC, the most heavily weighted stock in Taiwan, had shed 1.69 percent to NT$230.00, with 15.68 million shares changing hands. TSMC's losses alone wiped about 40 points off the Taiex.
Led by TSMC, the bellwether electronics sector had lost 1.31 percent.
Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., had lost 3.00 percent to NT$3,400.00, and integrated circuit designer MediaTek Inc. had dropped 2.03 percent to NT$217.00.
Downward pressure also spread to non-high-tech stocks, with Formosa Chemicals & Fiber Corp. down 3.06 percent to NT$111.00 and Formosa Petrochemical Corp. also down 2.03 percent at NT$120.50.
In the financial sector, CTBC Financial Holding Co. had lost 0.95 percent to NT$20.90, and Cathay Financial Holding had fallen 1.49 percent to NT$49.55.
"Judging from the heavy losses suffered by these large cap stocks, I suspect selling largely came from foreign institutional investors, who have recorded big sell-offs in recent sessions," MasterLink Securities analyst Tom Tang said.
Since the beginning of October, foreign institutional investors have sold a net NT$121.92 billion in shares on the market, their biggest net sell for any month so far this year.
"With no signs that the Washington-Beijing trade dispute will be resolved anytime soon, market sentiment has become very fragile and any volatility on Wall Street like Monday's fall will trigger selling in the local market," Tang said.
Tang said China's markets turned weaker Tuesday morning after a more than 4 percent technical rebound on Monday after China's government proposed stimulus measures to offset the impact of the trade war.
The weakness in China led investors elsewhere in the region to dump their stocks.
"Not only Taipei but also other major markets in the region such as Hong Kong and Tokyo moved lower as investors saw China's market fall again," Tang said.
"In the wake of such unfavorable external factors, I don't think it will be easy for the Taiex to return to the 10,000-point mark in the short term."
Tang said more volatility is possible in Taiwan, as the Taiex has no strong technical support until around 9,500 points.
Source: Focus Taiwan News Channel