The TAIEX yesterday tumbled 234.76 points, or 2.14 percent, to 10,748.92 points, as a renewed rout in the Turkish lira triggered a sell-off, with optical and electronics plays being the hardest hit, analysts said.
The plunge came after US President Donald Trump on Friday said he would double tariffs on aluminum and steel imports from Turkey, reigniting fears about the Turkish economy and sending its currency into a nosedive.
“We believe the Turkish issue will not escalate into a global financial crisis, although it has added uncertainty to the global economy and facilitated capital flight from emerging markets,” SinoPac Financial Holdings Co (永豐金控) chief economist Jack Huang (黃蔭基) said.
The local bourse and the New Taiwan dollar have been affected since late in the second quarter — a situation that is likely to persist throughout this year, Huang said.
Turnover was NT$157.474 billion (US$5.11 billion), with foreign players slashing their local holdings by a net NT$2.85 billion, Taiwan Stock Exchange data said.
Mutual funds also trimmed their holdings by a net NT$539 million, while proprietary traders cut their positions by a net NT$1.64 billion.
Hopefully, Turkey’s new fiscal measures would prove helpful, Huang said, as the Turkish currency has lost more than 40 percent this year, while inflation hit nearly 16 percent.
Optical shares bore the brunt of the sell-off, slumping 6.4 percent, followed by electronics, which fell 4.02 percent, Taiwan Stock Exchange (TWSE) statistics showed.
Largan Precision Co (大立光), which supplies camera lenses for Apple Inc’s iPhones, ended down 8.86 percent at NT$4,630, while Yageo Corp (國巨), the nation’s biggest passive component supplier, tumbled 8.29 percent to NT$597, TWSE figures showed.
A weak sentiment trumped the arrival of the high sales season for consumer electronics products, Masterlink Securities Investment Advisory Corp (元富投顧) president Liu Kun-hsi (劉坤錫) said.
The much-tracked global index MSCI is due to unveil its quarterly share weighting adjustments today and analysts believe it would continue to cut Taiwanese shares to accommodate the inclusion of Chinese A-shares.
The Turkish problem fed market jitters, but could prove a more influential factor, Liu said.
However, not all shares suffered, as local cement plays bucked the trend and rose 1.49 percent.
Taiwan Cement Corp (台灣水泥) closed up 1.57 percent at NT$42.15 on the back of strong first-half earnings results and sustained growth momentum for the rest of the year, President Securities Corp (統一證券) said.
In addition, the New Taiwan dollar is likely to soften further against the greenback, which would allow local exporters to book foreign exchange gains, the brokerage house said.
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