Taipei: Shares in Taiwan took a hit, plunging more than 500 points, with selling triggered by steep declines on U.S. markets at the end of last week amid rising concerns over the Federal Reserve's next move, dealers said. The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 523.53 points, or 2.28 percent, at 22,488.33 after fluctuating between 22,458.22 and 23,070.32. Turnover totaled NT$442.19 billion (US$13.35 billion).
According to Focus Taiwan, the market opened with a 0.25 percent increase at the day's high, as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) initially showed resilience. This helped the Taiex counter the headwinds arising from an almost 700 point drop on the Dow Jones Industrial Average and a 1.63 percent decline on the tech-heavy Nasdaq index on Friday, following better-than-expected U.S. nonfarm payroll data.
However, TSMC, the most heavily weighted stock on the local market, soon weakened, and the sell-off intensified, particularly in the afternoon session. Weakness among other electronics heavyweights further dragged down the Taiex, bringing it close to the day's low by the end of the session.
"The strong jobs report in the United States prompted a spike in treasury yields as investors fear the Fed will slow down the pace of its rate cuts," Concord Securities analyst Kerry Huang said. "Higher interest rates made tech stocks at home and abroad less attractive. In Taiwan, the Taiex was led by the bellwether electronics sector to move lower."
The electronics index declined 2.86 percent, with the semiconductor sub-index down 2.63 percent after TSMC, which initially rose to NT$1,115.00, fell 2.27 percent to close at NT$1,075.00. TSMC's losses accounted for about 200 points of the Taiex's fall.
Among other semiconductor firms, smartphone IC designer MediaTek Inc. dropped 5.12 percent to end at NT$1,390.00, and application-specific integrated circuit (ASIC) designer Alchip Technologies, Ltd. decreased by 5.09 percent to close at NT$2,795.00. In the broader tech sector, iPhone assembler Hon Hai Precision Industry Co. lost 5.51 percent to end at NT$171.50, and power management solution provider Delta Electronics Inc. fell 4.76 percent to close at NT$400.00.
Non-tech stocks also moved lower in line with the broader market, with some exceptions in the petrochemical industry, which was buoyed by higher international crude oil prices following U.S. sanctions against Russia's oil industry. Shares in Formosa Petrochemical Corp. rose 6.84 percent to end at NT$35.15, Formosa Plastics Corp. gained 2.86 percent to close at NT$32.35, and Nan Ya Plastics Corp. increased by 1.41 percent to NT$28.70.
In the old economy sector, China Steel Corp., the largest steel maker in Taiwan, lost 1.09 percent to close at NT$18.10, and Tung Ho Steel Corp. decreased 1.55 percent to NT$63.60. Additionally, Fortune Electric Co. dropped 4.16 percent to NT$484.00, and Shihlin Electric and Engineering Corp. ended down 1.40 percent at NT$176.50.
The financial sector lost 0.68 percent, with Cathay Financial Holding Co. shedding 2.35 percent to close at NT$64.20, and E. Sun Financial Holding Co. falling 1.10 percent to NT$27.05. Fubon Financial Holding Co. showed some resilience, dropping only 0.11 percent to close at NT$89.80, after reporting a new record high of NT$151.16 billion in net profit for 2024.
"It seemed many investors did not want to hold onto their stocks before the return of (Donald) Trump to the White House on Jan. 20," Huang added. "How he will carry out tariff hikes has created uncertainties in the global markets."
According to TWSE, foreign institutional investors sold a net NT$55.60 billion worth of shares on the main board Monday, marking the 11th highest net sell in history.