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Taiwan shares dive, led by electronics and financial stocks

Taiwan shares dive, led by electronics and financial stocks

Shares in Taiwan took a beating Wednesday, extending the losses from the previous session amid concerns over the exodus of foreign funds as the U.S. Federal Reserve is seen likely to raise its key interest rates soon, dealers said.

Selling featured the bellwether electronics sector and select large-cap stocks, in particular Taiwan Semiconductor Manufacturing Co. (TSMC), while the financial sector also faced heavy pressure, dealers said.

The weighted index on the Taiwan Stock Exchange closed down 114.24 points, or 1.37 percent, at the day's low of 8,229.62, off an early high of 8,343.37. Turnover totaled NT$88.99 billion (US$2.71 billion) during the session.

The market opened down 0.17 percent on follow-through selling from the previous day as investors here took cues from a further slide on Wall Street overnight, where the Dow Jones Industrial Average closed down 0.92 percent and the S&P 500 index dropped 0.65 percent, dealers said.

Selling escalated as investors rushed to dump large-cap stocks in both the high-tech and non-high tech sectors, with financial stocks coming under heavy pressure and late selling dragging down the electronics sector, dealers said.

"Investors were shocked by the heavy foreign institutional selling yesterday," said Mega International Investment Services Corp. analyst Alex Huang. "Many of them are worried that foreign investors will move funds out of the region if the Fed launches an interest rate hike cycle soon."

The local main board closed down 1.31 percent Tuesday, with foreign institutional investors selling a net NT$11.43 billion worth of shares amid lingering worry over a hike in U.S. rates when the Fed holds its policymaking meeting next week.

"Judging from today's selling, I think that foreign institutional investors remained on the sell side after cutting their long position contracts in the local futures market by about 8,000 yesterday," Huang said. According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$8.94 billion worth of shares on the main board Wednesday. The electronics sub-index closed down 1.35 percent and the semiconductor sub-index ended 1.57 percent lower.

Among the falling high-tech stocks, contract chip maker TSMC, the most heavily weighted stock on the local market, fell 1.40 percent to close at the day's low of NT$140.50 due to the late session pressure, with 26.77 million shares changing hands.

Largan Precision Co., a smartphone camera lens supplier to Apple Inc., was also hit by the late selling and dropped 1.91 percent to finish at NT$2,305.00, off an early high of NT$2,395.00 as market sentiment was affected by its disappointing sales data for November.

The financial sector closed down 1.54 percent, with Fubon Financial Holding Co. down 1.62 percent at NT$48.55, and Cathay Financial Holding Co. 2.61 percent lower at NT$42.85.

"Concerns are running deeper that a rate hike by the Fed will send ripples through the global financial markets, which could squeeze local financial firms' profitability as they have big investments in foreign financial instruments," Huang said.

He said that after the decline on Tuesday and Wednesday, the local main board has become technically weaker.

"Further losses are likely until the index moves closer to the nearest technical support at around 8,050 points," he said. (By Frances Huang)

Updated : 2021-09-18 15:11 GMT+08:00