The TAIEX yesterday tumbled 1.8 percent to 10,897.12 points, joining a sell-off across regional stock markets after US President Donald Trump threatened to increase tariffs on US$200 billion of Chinese goods on Friday.
The weighted stock index ended 199.18 points lower, its largest one-day loss this year, on turnover of NT$137.863 billion (US$4.46 billion), Taiwan Stock Exchange (TWSE) data showed.
Foreign institutional investors sold a net NT$13.96 billion of local shares, and securities investment companies sold a net NT$559 million, TWSE data showed.
Photo: Fang Pin-chao, Taipei Times
While the setback in Taipei was relatively smaller compared with other major markets in Asia, with Shanghai dropping 5.58 percent and Hong Kong falling 2.93 percent, volatility is expected to continue, analysts said.
Singapore was down 3.1 percent. Japan’s and South Korea’s markets were closed yesterday.
“Trump’s sudden tariff threat has turned investors pessimistic and [they] now think the trade war is likely to continue,” Xincheng International Investment Consultant (信誠環球投顧) analyst Chang Chih-cheng (張志誠) said.
“As it is not very likely that the two countries would resolve the complex core issues and reach an agreement before Friday, market sentiment is forecast to remain turbulent for a while,” Chang said.
The local market might remain under pressure until Friday, as more investors would want to sell their holdings to avoid risks, he said.
“There is a 30 percent chance that the talk between the US and China would break down,” UBS Group AG said in a note.
UBS said that a failure to reach a deal would not only drag the Chinese economy’s growth to below 6 percent, it would also drag down US stocks by more than 10 percent and Chinese stocks by more than 15 percent.
With the Dow Jones Industrial Average forecast to drop in yesterday’s trading, Taiwanese shares, which are highly sensitive to Wall Street’s performance, are expected to fall today, Capital Futures Corp (群益期貨) analyst Yeason Jung (容逸燊) said.
The TAIEX’s fall yesterday was marked by a 2.26 percent fall in the electronics sector, 1.28 drop in the financial sector and 0.86 percent dip in the food sector, TWSE data showed.
Except for smartphone camera lens maker Largan Precision Co (大立光), which advanced 1.5 percent after posting robust revenue growth last month, all Apple Inc suppliers saw their share prices sink, with Taiwan Semiconductor Manufacturing Co (台積電) falling 2.26 percent and Hon Hai Precision Industry Co (鴻海精密) plunging 3.74 percent.
“This might signal that investors had less confidence in Apple amid a potential escalation of the trade war, with the second quarter being a slack season,” Chang said.
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