Taiwan shares hit hard by worry over U.S. interest rate hike

Shares in Taiwan on Saturday extended their losses from the previous session, closing down more than 110 points as investor sentiment was hurt by growing fears of an interest rate hike by the U.S. Federal Reserve, dealers said.

The selling on the local main board followed a drop of almost 400 points on the Dow Jones Industrial Average overnight after a voting member of the Fed suggested that a gradual tightening of the U.S. central bank's policy would help support employment, dealers said.

On the Taiwan bourse, the bellwether electronics sector led the drop of the broader market, with "Apple concept stocks" in focus amid worry over sales of the latest iPhones, which tech analysts said delivered no surprises since the upgrade of specifications had been widely expected, according to dealers.

The weighted index on the Taiwan Stock Exchange (TWSE) ended down 111.19 points, or 1.21 percent, at 9,053.69, after moving between 9,025.53 and 9,084.81. Turnover totaled NT$48.35 billion (US$1.53 billion) during the session.

The local equity market was open Saturday to make up a lost trading session during the upcoming Mid-Autumn Festival holiday and was the only one in the world trading that day.

The main board opened down 0.87 percent after a 1.06 percent drop on Friday and a 1.23 percent fall on the Dow Jones Industrial Average and a 2.54 percent decline on the tech-heavy NASDAQ index overnight.

Dealers said investors were spooked by Boston Fed President Eric Rosengren's hint of a need to tighten U.S. monetary policy. The Fed prepared to hold its next policymaking meeting Sept. 20-21.

With the selling focused on the electronics sector, the local index dropped closer to the psychological 9,000 points but recovered some of its losses by the end of trade, dealers said.

"Rosengren had seemed dovish toward a rate hike but his latest comments indicated a change in outlook," Hua Nan Securities analyst Kevin Su said. "Since he is a voting member at the Fed, his comments spooked many investors."

Su said Saturday's heavy selling in large-cap high-tech stocks indicated that foreign institutional investors have started to cut their holdings to move funds out of the region before the Fed raises interest rates. According to the TWSE, foreign institutional investors sold a net NT$5.98 billion worth of shares on the main board Saturday after a net sell of NT$7.58 billion on Friday.

The electronics sector closed down 1.23 percent with Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., falling 4.30 percent to end at NT$3,450.00. Largan however remained the most expensive stock on the local market.

"Although the new iPhone 7 Plus sports a dual lens camera, such a positive lead has been digested by the market," Su said. "Investors simply pocked their gains in Largan in recent sessions, which push the stock sharply lower today."

Furthermore, he said, the market is worried that sales of the new iPhones will be slower than their predecessors, which sent other Apple concept stocks lower.

Among the other suppliers to Apple, metal casing maker Catcher Technology Co. (??) fell 3.31 percent to close at NT$233.50, and Pegatron Corp. (??), which assembles the iPhone 7, shed 1.83 percent to end at NT$75.00.

However, Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPad, bucked the downturn, rising 0.39 percent to close at NT$78.00.

Taiwan Semiconductor Manufacturing Co. (TSMC, ???), which is said to be supplying the A10 processors for the new iPhones, fell 0.84 percent to end at NT$178.00 after recovering from a low of NT$176.00. TSMC is the most heavily weighted stock on the local market.

In the financial sector, which fell 1.32 percent, Fubon Financial Holding Co. (???) dropped 2.39 percent to close at NT$44.85 and Cathay Financial Holding Co. (???) ended 1.73 percent lower at NT$39.75.

Source: Focus Taiwan News Channel