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Taiwan shares fall below 8,300 points in mid-morning session.

Taiwan shares fall below 8,300 points in mid-morning session.

Taipei, Aug. 12 (CNA) Taiwan shares came under pressure soon after the local main board opened Wednesday, falling below 8,300 points as investors took cues from a plunge on Wall Street and the European markets overnight after a sharp devaluation of the Chinese yuan to dump their holdings here, dealers said.
The financial sector led the downturn amid fears that local financial institutions will incur losses resulting from their yuan-denominated investments, while the bellwether electronics sector appeared resilient on hopes that the Taiwan dollar will follow the yuan to depreciate in a bid to protect Taiwan's exports, they said.
As of 10: 57 a.m., the weighted index on the Taiwan Stock Exchange had fallen 1.33 percent to 8,282.33 on turnover of NT$51.72 billion (US$1.61 billion). The financial sub-index was down 4.48 percent, and the electronics sector was 0.95 percent lower.
"A move by the People's Bank of China (PBOC) to set the reference rate of the yuan by 1.86 percent lower yesterday to plunge the Chinese currency to a three-year low against the U.S. dollar, reflects a currency depreciation competition in the region which has been escalating," Hua Nan Securities analyst Henry Miao said.
On Wednesday, the PBOC, the Chinese central bank, set the yuan's reference rate even lower, down about 1.62 percent from a day earlier. The Taiwan dollar fell to NT$0.093 at 10 a.m. after a NT$0.320 decline seen Tuesday.
"The losses on Wall Street overnight showed concerns that a stronger U.S. dollar will incur large foreign exchange losses for U.S. exporters at a time when a regional currency deprecation war has been breaking out," Miao said, adding that a plunge of Apple Inc.'s share price was evidence of such fears.
Apple shares fell 5.20 percent on Tuesday as China contributes a large chunk of revenue to the U.S. consumer electronics giant. The Dow Jones Industrial Average fell 1.21 percent and the tech-heavy NASDAQ index shed 1.27 percent overnight.
"It was no surprise that the local equity followed Wall Street's footsteps to move lower as the Taiwan and U.S. markets are highly correlated," Miao said. "Fears are mounting that as the Taiwan dollar continues to fall in line with other regional currencies, foreign investors will move funds out of the region, dealing a big blow to local equity prices."
In the financial sector, shares of Fubon Financial Holding Co. had shed 7.39 percent to NT$52.60, and shares of Cathay Financial Holding Co. has lost 6.59 percent to NT$46.80 as of 10:57 a.m.
"Many investors have worries that local financial institutions have large yuan-denominated investment positions and a fall in the yuan could erode their bottom lines," Miao said.
Among the more resilient high-tech stocks, shares of PC vendor Asustek Computer Inc. had added 8.58 percent to NT$272.00 as of 10:57 a.m. after the company reported better-than-expected earnings for the second quarter.
Shares of integrated circuit packaging and testing services provider Advanced Semiconductor Engineering Inc.had added 0.31 percent to NT$32.70, while shares of Taiwan Semiconductor Manufacturing Co., the most heavily weighted stock in the local market, had lost 1.53 percent to NT$128.50.
"The global financial markets are full of uncertainty. Investors should keep alert for further volatility down the road," Miao said. (By Frances Huang)


Updated : 2021-09-18 06:34 GMT+08:00