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Local shares fall on TSMC cut and Wall Street losses

A man stares at stock monitors showing the sharp drop in securities at a brokerage in Taipei yesterday. PHOTO: CNA

Local shares ended their five-day rebound yesterday, with the benchmark index shedding 161.45 points, or 3.57 percent, to close at 4,356.98 points on the back of Wall Street’s overnight losses and market bellwether Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) sales warning.

Analysts said the drop could signal a deepening downturn, and the market may not post a strong rebound until the economy recovers.

The weighted stock index opened down 207.93 points from the previous day at 4,310.5 and traded in negative territory. Government intervention in the last few minutes narrowed the decline by 64 points. Turnover was NT$54.144 billion (US$1.61 billion), down NT$12.91 billion from a day earlier, Taiwan Stock Exchange data showed.

HIGH-TECH STOCKS

Alan Tseng (曾炎裕), an analyst at Capital Securities Corp (群益證券), said high-tech shares spearheaded the tumble as institutional investors dumped more than NT$3.1 billion in TSMC stock after the world’s largest contract chipmaker lowered its fourth-quarter sales forecast to between NT$63 billion and NT$65 billion, from its estimate of NT$69 billion to NT$71 billion made in late October.

Tseng said it was “uncommon for institutional investors” to dump TSMC stock.

“TSMC’s revised forecast sent a chilling message that makers in the supply chain will suffer the same fate, or even worse,” Tseng said.

Foreign fund managers sold a net NT$5.8 billion in shares.

Tseng said the Dow Jones Industrial Average’s poor performance was also to blame for the TAIEX’s fall. The US index plunged 669.95 points, or 7.7 percent, to close at 8,149.09.

Winson Wang (王榮旭), an analyst at Marbo Securities Consultant Co (萬寶證券投顧), said that TSMC’s downward revision was worse than expected and added to the gloom in a market already clouded by uncertainty.

“The rebound last week was technical in nature, as the economic fundamentals at home and abroad remained the same, if they did not deteriorate,” Wang said by telephone.

“The TAIEX will continue to trend down in the foreseeable future with sporadic rallies,” he said.

Wang said the index may fluctuate between 3,955 and 4,567 points if its US counterpart does not fall below the 7,499 threshold.

Meanwhile, foreign capital will continue to pull out of Asian markets, including Taiwan, and the New Taiwan dollar will further weaken against the greenback, Wang said.
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