Taiwan shares plunge amid US-China trade friction
Taiwan shares plunge amid U.S.-China trade friction2018/06/19 11:58:25
Taipei, June 19 (CNA) Taiwan shares took a beating Tuesday morning, falling more than 100 points, amid escalating fears over a trade war between the United States and China, dealers said.
Selling focused on large-cap stocks, particularly in the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, they said.
As of 10:46 a.m., the weighted index on the Taiwan Stock Exchange (Taiex), had fallen 163.32 points, or 1.47 percent, to 10,924.84 on turnover of NT$89.04 billion (US$2.96 billion).
The main board encountered heavy downward pressure on opening and the selling escalated among electronics heavyweights, which sent the Taiex plunging by more than 100 points, dealers said.
"The Taiex was closed on Monday for the Dragon Boat Festival holiday while other regional markets were reacting badly to the simmering trade friction between Washington and Beijing," MasterLink Securities analyst Tom Tang said. "Today, local equities are catching up as selling emerged right after the market opened."
On Friday, U.S. President Donald Trump announced an additional 25 percent tariff on US$50 billion worth of imports from China, including machinery, robotics, aerospace items, information technology devices and auto products, with effect from July 6.
In retaliation, China said that on the same date it will impose a 25 percent tariff on US$34 billion worth of U.S. soybeans, electric vehicles and other products and will look at slapping the tariff on another US$16 billion worth of American goods.
Following that statement, Trump on Monday threatened to impose a 10 percent tariff on US$200 bi llion worth of Chinese products.
"While I do not believe there will be an all-out trade war between the U.S. and China as there is still room for negotiation, foreign institutional investors in particular are seizing on that development to lock in their earlier gains," Tang said. "Large-cap electronics stocks such as TSMC are the main targets."
As of 10:46 a.m. Tuesday, TSMC had dropped NT$6.50, or 2.81 percent, to NT$224.50 with 30.68 million shares changing hands. Its losses dragged down the Taiex by about 65 points and led the bellwether electronics sector to a 1.68 percent loss.
"With TSMC weakened, the broader market is unlikely to stabilize," Tang said.
"The stock could see more selling as it moves closer to the nearest technical resistance of NT$220.00."
Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co., second only to TSMC in terms of market value, had fallen 2.00 percent to NT$83.30, and Larg an Precision Co., a smartphone camera lens supplier to Apple Inc., had dropped 4.03 percent to NT$4,405 as of 10:46 a.m.
The selling had also spread to non-tech stocks, dragging down the financial sector 1.26 percent. Among the falling financial stocks, Fubon Financial Holding Co. had dropped 1.30 percent to NT$53.00 and Cathay Financial Holding Co. 1.45 percent to NT$54.50.
"Foreign institutional investors, who have been on the sell side in recent sessions, will determine the movement of the main board," Tang said. "Investors will be watching closely whether the Taiex manages to close above 10,900 points or becomes technically weaker."
According to the TWSE, foreign institutional investors sold a net NT$2.07 billion worth of shares June 1-15.
(By Frances Huang)