Taiwan shares shed over 150 points amid geopolitical tensions

Taipei-Shares in Taiwan suffered heavy losses Monday, falling more than 150 points with selling triggered by geopolitical tensions after a U.S. drone strike killed a top Iranian military leader last week, dealers said.

Selling focused on large cap stocks in the bellwether electronics sector throughout the session, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), while a spike in international crude oil prices caused by the political tensions in the Middle East boosted select major petrochemical stocks, they said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex ended down 157.07 points, or 1.30 percent, at the day's low of 11,953.36, off an early high of 12,040.08, on turnover of NT$143.08 billion (US$4.753 billion).

The market opened down 0.62 percent in a knee-jerk reaction to the latest losses on U.S. markets, where the Dow Jones Industrial Average fell 0.81 percent, and the tech-heavy Nasdaq index dropped 0.79 percent Friday with investors motivated by Washington's killing of Iranian military commander Qasem Soleimani, dealers said.

Downward pressure on the main board escalated, focusing on market heavyweights, pushing the Taiex below the 12,000 point mark, as investors took their cue from losses on other regional markets, such as Tokyo, Hong Kong and Seoul, to further unload their holdings until the end of the session, they said.

"After the death of the Iranian military leader, Iran has vowed to retaliate so the global financial markets have been bothered by possible impacts resulting from the country's retaliation," Concord Securities analyst Kerry Huang said.

Iran has also said that it would not abide by uranium enrichment limits established in a 2015 nuclear deal, from which the U.S. unilaterally withdrew in 2018.

"Such political uncertainty led investors to punish equity markets around the world, and Taipei was no exception," Huang said. "Today's large cap tech stocks just fell victim to unfavorable non-economic factors."

After its American depositary receipts fell 3.30 percent on the U.S. market Friday, TSMC, the most heavily weighted stock on the local market, shed 2.21 percent to close at the day's low of NT$332.00 with 45.25 million shares changing hands.

Led by TSMC, the bellwether electronics sector shed 1.82 percent and the semiconductor sub-index fell 2.17 percent.

TSMC's selling spread to other integrated circuit stocks with IC designer MediaTek Inc. down 2.42 percent to close at NT$424.00, and IC packaging and testing services provider ASE Technology Holding Co. down 3.70 percent to end at NT$78.70.

Also in the high tech sector, iPhone assembler Hon Hai Precision Industry Co. fell 1.20 percent to close at NT$90.50, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., shed 3.79 percent to end at NT$4,695.00 after the company reported a 23 percent month-on-month fall in sales for December.

"Judging by the movement of these large cap stocks, I think foreign institutional investors stood on the sell side throughout the session," Huang said.

According to the TWSE, foreign institutional investors sold a net NT$9.75 billion worth of shares on the main board Monday, after net sales of NT$135.87 million a session earlier.

"However, the petrochemical sector appeared resilient today in the wake of a hike in crude prices due to the political crisis in the Middle East," Huang said. Brent futures, the global benchmark rose, and U.S. futures rose more than 2 percent on the Asian market Monday morning due to the political tensions.

On the main board, shares in Formosa Petrochemical Corp. bucked the downturn rising 0.99 percent to close at NT$102.00, and Formosa Plastics Corp. gained 0.49 percent to end at NT$102.00, while Formosa Chemicals and Fibre Corp. lost 0.11 percent to close at NT$88.50 but still outperformed the Taiex.

Geopolitical concerns also dragged down other non-tech stocks to send the broader market even lower, Huang said.

Among the falling old economy stocks, China Steel Corp., the largest steel maker in Taiwan, lost 1.24 percent to close at NT$23.80, food brand Uni-President Enterprises Corp. fell 1.20 percent to end at NT$73.90, and Taiwan Cement Corp. dropped 1.14 percent to close at NT$43.45.

In the financial sector, which ended down 0.88 percent, Cathay Financial Holding Co. fell 1.29 percent to close at NT$42.25, and Cathay Financial Holding Co. lost 0.75 percent to end at NT$46.40.

In addition to the situation in the Middle East, Huang said, global trade remains an issue for the markets.

"The United States and China are expected to sign a phase one deal on Jan. 15 to resolve their trade disputes so investors had better keep a close eye on the details of the agreement," Huang said.

Source: Focus Taiwan News Channel