Local shares yesterday fell 1.88 percent in Taipei trading, marking the third-largest one-day plunge this year, and analysts said a heavy fall in electronics shares could signal that the fourth quarter would not be the peak season for the industry.
The TAIEX fell 201.79 points to close at 10,517.12, a fourth consecutive day of decline, with turnover totaling NT$148.804 billion (US$4.83 billion), Taiwan Stock Exchange data showed.
Shares of Taiwan Semiconductor Manufacturing Co (台積電), the largest contract chipmaker in the world, fell 1.57 percent to close at NT$250 amid the heavy selling pressure, while shares of Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, dropped 0.79 percent to close at NT$75.6.
“Today’s 1.88 percent decline is the third-largest one-day fall this year after a 4.95 percent plunge on Feb. 6 and a 2.14 percent retreat on Aug. 13,” Capital Investment Trust Corp (群益投信) fund manager Daniel Tsai (蔡彥正) told the Taipei Times by telephone.
“It reflected fading market confidence following a CNN report about a proposal from the US Navy’s Pacific Fleet to put on a show of force to warn China, but it is just a short-term impact,” Tsai said.
However, driven by the decline in electronics shares, the TAIEX shed 489 points, or 4.4 percent, this week, causing the benchmark index to fall below 11,000 points, the end of 16 months of staying above the psychologically important level since June last year, he said.
The negative factors affecting the electronics shares include a high inventory in the semiconductor industry, decreasing demand for consumer electronics products such as smartphones and PCs, Intel Corp’s slow progress in moving its output to 10-nanometer technology and a shortage of processors, Tsai said.
“This will have a long-term impact on Taiwanese shares,” he said.
As it usually takes two quarters for the industry to adjust inventories, the fourth quarter might not be a high season for the electronics industry and the impact could continue until the first quarter next year, he added.
Hua Nan Securities Investment Management Co (華南投顧) chairman David Chu (儲祥生) said local shares could rise after this week’s correction, but it would be difficult for the TAIEX to climb above the 12,000-point level in the near future.
“It would be good enough if the TAIEX could return to the 11,000-point level, given the recent setback,” Chu said.
Meanwhile, the state-run National Stabilization Fund has no immediate plans to intervene in the stock market to prop up share prices, Deputy Minister of Finance Frank Juan (阮清華) said yesterday.
Juan, the executive secretary of the stabilization fund, said that although the local main board had taken a beating in recent sessions, the losses were largely caused by volatility in global financial markets.
“Many listed companies on the main board and the over-the-counter market enjoyed an increase in earnings,” Juan said. “Moreover, Taiwan, as a whole, has an improving economy. So after today’s plunge, I expect the local equity market to return to better fundamentals.”
“Blessed by sound economic fundamentals, investors should have faith in the future movement of the local equity market,” he said.
Additional reporting by CNA
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