The TAIEX this week lost more than NT$1 trillion (US$32.97 billion) in market capitalization over COVID-19 fears and the downtrend might extend into next week, analysts have said.
The TAIEX, which was closed yesterday for the national holiday, fell 3.37 percent, or 394.18 points, in just four trading sessions to close at 11,292.17 after the Dow Jones Industrial Average fell by 2,000 points between Monday and Wednesday.
Due to the fall, its market capitalization fell about NT$1.19 trillion from last Friday to NT$34.30 trillion, data compiled by the Taiwan Stock Exchange showed.
The Dow on Thursday fell another 1,200 points, the steepest single-session fall in the index’s history, amid escalating concerns over the spread of the virus, and analysts said that the TAIEX could fall further when trading resumes on Monday.
Allianz Global Investors Taiwan Technology Fund (安聯台灣科技基金) manager Peter Liao (廖哲宏) said that it was unlikely that the Dow would stabilize anytime soon amid the COVID-19 scare, meaning that the TAIEX would likely see more volatility next week.
The Dow losses could propel investors in Taiwan to dump more of their holdings, Liao said, adding that how foreign institutional investors react would be a critical factor in predicting what other investors decide to do.
Heavy selling in Taiwan this week largely came from foreign institutional investors, who sold a net NT$94.44 billion in shares, punishing large-cap stocks across the board over fears that the outbreak could hurt production as well as consumption, analysts said.
Among the falling large-cap tech stocks, contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電) lost 2.77 percent this week to close at NT$316.00 on Thursday and iPhone assembler Hon Hai Precision Industry Co (鴻海精密) fell 1.71 percent to close at NT$80.30.
Largan Precision Co (大立光), an Apple camera lens supplier, fell 3.9 percent to close at NT$4,610.00.
Among old economy stocks, which also suffered heavy losses, Formosa Petrochemical Corp (台塑石化) shed 3.26 percent this week to close at NT$86.10, and Formosa Plastics Corp (台灣塑膠) fell 3.81 percent to end at NT$91.00.
Analysts said that the TAIEX is likely to test the technical support at the 240-day moving average of 11,054 points soon, and said that investors should set aside cash for when buying opportunities emerge.
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