Taipei, Taiwan shares took a beating Wednesday morning as investors rushed to dump their holdings after markets in the United States tumbled overnight because of political turmoil in Italy, dealers said.
Selling focused on stocks in the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), to push the Taiwan Stock Exchange's benchmark index, the Taiex, down by more than 100 points, they said.
As of 11:25 a.m., the Taiex had fallen 149.42 points, or 1.36 percent, to 10,814.70 on turnover of NT$98.40 billion (US$3.28 billion).
The market opened moderately lower but downward pressure escalated as the losses in the U.S. increasingly weighed on investor sentiment, pulling the Taiex even lower, dealers said.
The Dow Jones Industrial Average fell almost 400 points, or 1.58 percent, on Tuesday on investor fears that the political crisis in Italy will have implications for the rest of the euro zone.
The political drama in Italy intensified after President Sergio Mattarella blocked the formation of a government on Sunday, which sent the euro into a tailspin. The political situation also hurt stock markets around the world.
"Investors here were stunned by the heavy losses suffered by Wall Street and fear there will be more volatility," MasterLink Securities analyst Tom Tang said.
"They simply seized on the political turmoil as an excuse to lock in gains they had built in recent sessions."
"In particular, after the stock market tried but failed to close above the 11,000-point mark recently, many investors seemed to have lost patience," Tang said.
Tang said large cap stocks, in particular in the electronics sector, were the main victims of the sell-off.
Among the falling tech stocks, TSMC, the most heavily weighted stock in the local market, had lost 1.78 percent to NT$221.00 with 27.06 million shares changing hands as of 11:25 a.m.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, had dropped 0.80 percent to NT$86.90, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., had fallen 1.18 percent to NT$4,205.00.
In the financial sector, hit hard by a plunge in banking stocks in the U.S., Fubon Financial Holding Co. had lost 2.84 percent to NT$51.30, and Cathay Financial Holding Co. had shed 2.40 percent to NT$52.80.
"Judging from the losses suffered by these market heavyweights, I think selling largely came from foreign institutional investors as they sold stocks here to meet redemption demand back in their home markets," Tang said.
Tang said the Taiex's nearest technical support is expected to be seen around 10,800 points.
"If the Taiex fails to manage to close above that level, more losses could come," Tang said.
Source: Focus Taiwan News Channel