Taiwan shares plunge amid geopolitical tensions

Taipei--Shares in Taiwan took a beating Wednesday as market sentiment was affected by rising geopolitical tensions after North Korea threatened that it is considering a missile strike on U.S Pacific territory Guam, dealers said.

Selling focused on large-cap stocks, in particular in the bellwether electronics sector, such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???) and iPhone assembler Hon Hai Precision Industry Co. (??), which pushed down the broader market below the nearest technical support level of the 20-day moving average of 10,476 points, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE) closed down 98.59 points, or 0.93 percent, at 10,470.38, after moving between 10,457.52 and 10,536.19, on turnover of NT$111.453 billion (US$3.68 billion).

The market opened down 0.43 percent on follow-through selling from a session earlier, as well as losses posted on Wall Street, where the Down Jones Industrial Average stopped a 10-session rising streak overnight, the dealers said.

Selling on the local main board escalated as investors took cues from the weakness of other regional markets, which felt the pinch of the threats from North Korea, sending the local weighted index below the 10,500-point mark by the end of the session, they said.

"The equity market fears non-economic factors like the tensions between Pyongyang and Washington, so many investors preferred to lock in their recent gains for the moment," said Hua Nan Securities analyst Henry Miao.

In response to North Korea's missile launch plan, U.S. President Donald Trump said that Pyongyang's threats will be "met with fire and fury."

"Investors were waiting for the political situation to become clearer before jumping into the trading floor again. Today, they cut their holdings in large-cap stocks, which sent the weighted index into a tailspin," Miao said.

Among the falling market heavyweights, TSMC, the most heavily weighted stock in the local equity market, fell 1.38 percent to close at NT$214.50, with 28.05 million shares changing hands.

Led by the fall suffered by TSMC, the bellwether electronics sector ended down 1.23 percent, the steepest decline among the major industrial sectors on the local main board.

Also in the high tech sector, Hon Hai, second to TSMC in terms of market capitalization, shed 2.48 percent to close at NT$118.00, Largan Precision Co. (???), a smartphone camera lens supplier, lost 1.95 percent to close at NT$5,540.00, and flat panel maker Innolux Corp. (??) shed 2.79 percent to end at NT$13.95.

Selling also spread to the non-high tech sector, in particular financial stocks, throughout the trading session, adding downward pressure on the broader market, Miao said.

In the financial sector, which closed down 0.86 percent, Hua Nan Financial Holding Co. (???) fell 1.09 percent to end at NT$18.10, Cathay Financial Holding Co. (???) lost 1.21 percent to close at NT$48.95, and Mega Financial Holding Co. (???) shed 1.34 percent to end at NT$25.70.

"Judging from the downturn of market heavyweights today, I think that foreign institutional investors stood on the sell side as they have started to cut their long-position contracts in futures in recent sessions," Miao said.

According to the TWSE, foreign institutional investors sold a net NT$6.95 billion (US$230 million)-worth of shares on the main board Wednesday.

"Investors had better watch closely whether the weighted index will be able to bounce back to the 10,500-point level over the next few sessions. Otherwise, the main board will become technically weaker, paving the way for longer consolidation," Miao said.

Source: Focus Taiwan News Channel