Taiwan shares fall below 10,400 points amid geopolitical tensions

Taipei--Shares in Taiwan extended losses from the previous session, falling more than 1 percent at the close of trading on Thursday as market sentiment was hit hard by lingering concerns over tensions between North Korea and the United States, dealers said.

Downward pressure was seen across the board with large-cap stocks highlighted, pushing the weighted index below the 10,400 point mark, at a time when Pyongyang reiterated its intention to launch missiles into waters close to U.S. Pacific territory Guam "within days," they said.

Many investors also cut their holdings in the local equity market ahead of a quarterly index review by global index provider MSCI Inc. on Friday amid fears that Taiwan's weighing in the MSCI indexes could be cut further, they added.

The weighted index on the Taiwan Stock Exchange (TWSE) closed down 140.64 points, or 1.34 percent, at 10,329.74, after moving between 10,303.47 and 10,477.79, on turnover of NT$135.47 billion (US$4.57 billion).

The market opened down 0.35 percent on follow-through selling from the previous session as tensions were raised in the area after North Korea responded to U.S. President Donald Trump saying Pyongyang's missile threat could be met with "fire and fury", dealers said.

Selling on the local main board escalated as investors rushed to dump large cap stocks, in particular bellwether electronics sector and financial sector shares, pushing the weighted index below the 10,400 point level by the close, they said.

"Look at other regional equity markets, which recouped part of their earlier losses today," Mega International Investment Services Corp. analyst Alex Huang said. "With more and more local retail investors jumping onto the local trade floor in recent sessions, such non-economic factors became more influential to market sentiment here."

Despite the plunge in Thursday's weighted index, foreign institutional investors still stood on the buy side, registering net purchases of NT$1.09 billion worth of shares on the main board Thursday, according to the TWSE.

"The local main board underperformed other regional markets after stop loss selling was triggered as investors witnessed the weighted index fall below the 20-day moving average of 10,470 points and even trend lower," Huang said. "Market heavyweights were the victims of the selling."

The bellwether electronics sector closed down 1.25 percent after iPhone assembler Hon Hai Precision Industry Co. (??), the second largest stock on the local market in terms of market capitalization, fell 1.69 percent to end at NT$118.00, and smartphone camera lens maker Largan Precision Co. (???), the most expensive local stock, shed 2.89 percent to close at NT$5,380.

"Fortunately, TSMC (Taiwan Semiconductor Manufacturing Co., ???) appeared resilient, recovering its earlier losses, which prevented the electronics sector and even the broader market from falling further," Huang said.

"I suspect that buying in the stock largely came from government-led funds," he said.

Contract chip maker TSMC, the most heavily weighted stock on the local market, lost 0.23 percent to close at NT$214.00, off an early low of NT$212.50, with 26.27 million shares changing hands.

In the financial sector, which ended down 1.94 percent, shares in Fubon Financial Holding Co. (???) fell 1.87 percent to close at NT$47.20, Mega Financial Holding Co. (???) lost 1.65 percent to end at NT$23.90 and Cathay Financial Holding Co. (???) dropped 1.63 percent to close at NT$48.15.

"The nearest technical support is expected at around 10,316 points, the 60-day moving average for the main board. If the weighted index fails to sustain itself above that level, share prices could test 10,283 points, the intraday low seen on July 10, soon," Huang said.

Source: Focus Taiwan News Channel