Taipei Shares in Taiwan fell sharply, down more than 150 points, Monday amid growing concerns over the novel coronavirus (COVID 19) epidemic, originally from the Chinese city of Wuhan, after the number of confirmed cases outside China rose dramatically, dealers said.
Selling focused on large cap stocks, in particular in the export oriented bellwether electronics sector with investors fearing the spread of the virus will undermine global demand and hurt tech firms' shipments, they said.
The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex closed down 151.48 points, or 1.30 percent, at 11,534.87, after moving between 11,512.08 and 11,615.28, on turnover of NT$138.19 billion (US$4.54 billion).
The market opened down 0.61 percent, a reflection of the latest heavy losses on U.S. markets, where the tech heavy Nasdaq index fell 1.79 percent and the Dow Jones Industrial Average lost 0.78 percent on weaker manufacturing activity and worries over the global virus spread on Friday, dealers said.
Downward pressure on the local main board escalated as local investors were stunned by a spike in the confirmed cases in South Korea, where the number rose 161 Monday to boost the total to 763, dealers said, adding that the jump in new cases outside China raised fears over the epidemic.
With sentiment dampened, investors simply dumped their holdings in tech heavyweights, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, and its losses led the downturn of the broader market throughout the session, dealers said.
"The scare over the virus spreading outside China is sending ripples through futures on Wall Street, pointing to an ugly beginning of the Monday session later in the day," Concord Securities analyst Kerry Huang said. Futures on the Dow fell more than 380 points at one point.
"It was no surprise that investors here cut their holdings for the moment in a bid to avoid further losses down the road caused by further downturns on the Dow in the spot market," Huang said.
The local electronics sector also fell victim to fears over the virus spreading, falling 1.37 percent, led by TSMC, as few have any idea when the virus can be contained and its impact on the global economy, he added.
TSMC, fell 1.54 percent to close at NT$320.00 with 41.55 million shares changing hands. The stock's losses also sent the semiconductor sub index down 1.58 percent.
"The losses suffered by TSMC did not result from the weakness of fundamentals but from a psychological impact," Huang said, referring to the company's recent announcement that it will leave its sales forecast for the first quarter of this year unchanged. "But, the virus worries could create more selling in the stock which is not expected to see strong technical support until it falls to around NT$312.00."
Other semiconductor stocks felt the pinch from TSMC's losses, dealers said. Among them, United Microelectronics Corp. (UMC), a smaller rival to TSMC, lost 1.56 percent to close at NT$15.80, integrated circuit packaging and testing services provider ASE Technology Holding Co. fell 1.73 percent to end at NT$73.90, and IC designer MediaTek Inc. shed 2.84 percent to close at NT$377.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization, fell 1.22 percent to close at NT$80.70, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., lost 2.74 percent to end at NT$4,610.00.
"I think foreign institutional investors largely stood on the sell side, punishing these tech heavyweights," Huang said.
According to the TWSE, foreign institutional investors sold a net NT$26.34 billion worth of shares on the main board Monday.
Selling was seen almost across the board Monday on weaker sentiment, Huang said.
Among falling old economy stocks, Nan Ya Plastics Corp. lost 1.29 percent to end at NT$68.90, Formosa Plastics Corp. fell 1.37 percent to close at NT$93.30, and Formosa Chemicals & Fibre Corp. shed 1.54 percent to end at NT$83.10.
In the financial sector, which closed down 1.20 percent, Fubon Financial Holding Co. fell 1.53 percent to close at NT$45.00, Mega Financial Holding Co. lost 1.51 percent to end at NT$32.70, and Cathay Financial Holding Co. dropped 1.09 percent to close at NT$40.85.
In addition to keeping a close eye on the spread of the virus, Huang said, investors had better watch closely whether Washington tightens sanctions against Chinese telecom equipment supplier Huawei Technologies Co., which could impact Taiwanese semiconductor makers.
"More volatility on the Taiex is possible," Huang said. "The next strong technical support is expected to be seen at around the 120 day moving average of 11,431 points."
Source: Focus Taiwan News Channel