Taiwan’s benchmark index closed below the 7,600-point mark for the first time in more than two months after it was hit hard by losses among high-tech stocks that fell prey to a dive by US consumer electronics giant Apple on Wall Street overnight, dealers said.
Local firms in Apple’s supply chain, such as Hon Hai Precision Industry Co (鴻海精密), which manufactures iPhones and iPads through its broad global production base, encountered heavy selling amid fears that demand for Apple’s gadgets could be weakening, while smartphone maker HTC Corp (宏達電) plunged on concerns over its bottom line, dealers said.
The TAIEX ended down 143.99 points, or 1.86 percent, at the day’s low of 7,585.87, off an early high of 7,752.10, on turnover of NT$86.36 billion (US$2.93 billion). It was the first time the index had closed below 7,600 since Feb. 1.
“Apple’s latest steep fall has seriously hurt sentiment toward the high-tech sector at home and abroad,” Mega Securities Co (兆豐證券) analyst Alex Huang (黃國偉) said.
Among the “Apple concept stocks,” cellphone camera lens supplier Largan Precision Co (大立光) lost 3.68 percent to close at NT$549.00, Hon Hai Precision fell 3.93 percent to end at NT$110.00 and touch-panel maker TPK Co (宸鴻) closed down 6.48 percent at NT$425.50.
Analysts said HTC, which is an Apple competitor, also faced stiff technical resistance, ending down 6.19 percent at NT$485.00 amid concern over the company’s profitability after it posted disappointing results for the first quarter of this year.
In the first quarter, HTC posted NT$4.46 billion in unaudited consolidated net profit, down 70 percent from a year earlier, while its earnings per share stood at NT$5.35, down sharply from NT$18.36 a year earlier.
The company is planning to launch a series of bargain smartphone models in China priced below 2,000 yuan (US$318) to gain a larger share of the Chinese market.
“But the company’s plan to launch low-priced models in China has raised concerns over its bottom line, which will be further squeezed by such a business strategy,” MasterLink Securities (元富證券) analyst Tom Tang (湯忠謙) said.
The sell-off of HTC shares led to a domino effect on other high-tech heavyweights and even spread to old economy sectors during yesterday’s trading session.
Huang said the local market has become technically weak and he expected the fall below the 7,600-point mark to pave the path for further losses on the TAIEX.
“If the market fails to manage itself to stand well above 7,500 points, the index is expected to test 7,300 points or even 7,200 points in the short term,” he said.