The local stock market yesterday tumbled 1.7 percent as foreign institutional investors dumped a net NT$19 billion (US$605.6 million) of local shares, after US President Donald Trump announced a new 10 percent tariff on US$300 billion of Chinese imports from next month.
The TAIEX ended 182.71 points lower at 10,549.04, with turnover of NT$158.05 billion, Taiwan Stock Exchange (TWSE) data showed.
The plunge was led by large-cap stocks and mobile phone and notebook computer manufacturers, as the two electronic devices are among the products on the tariff list.
With US$45.8 billion of smartphones and US$38.7 billion of notebooks expected to be included in the new tariff list, investor confidence regarding the two industries has weakened, Capital Investment Trust Corp (群益投信) fund manager Daniel Tsai (蔡彥正) told the Taipei Times by telephone.
As the US-China trade dispute might escalate because of Trump’s latest move, the US is expected to maintain its ban on Huawei Technologies Co (華為), Tsai said, adding that this prompted concern about a weakening business outlook for Huawei’s chip suppliers in the US and that the effect could spread to the whole semiconductor supply chain.
“As the tariffs will increase the retail prices of consumer goods, consumers will be less willing to spend money ... which could become a drag on economic growth. This is the reason investors lost confidence [in the stock market],” Tsai said.
Shares of electronic components suffered the brunt of the stock market rout. Smartphone camera lens maker Largan Precision Co’s (大立光) shares plunged 7.93 percent to NT$3,890, while Elite Material Co (台光電) and Iteq Corp (聯茂), which manufacture copper-clad laminates for printed circuit boards, saw their shares plummet 6.35 and 6.91 percent to NT$118 and NT$128, respectively, TWSE data showed.
Shares of Taiwan Semiconductor Manufacturing Co (台積電), the largest contract chipmaker in the world, fell 1.95 percent to close at NT$251.5, while shares of Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, sank 3.08 percent to NT$75.5, the TWSE data showed.
The TAIEX’s decline yesterday marked the fourth-largest daily loss since the beginning of this year, after an 1.8 percent plunge on May 6, a 1.78 percent decline on Jan. 2 and a 1.74 percent drop on May 9, Tsai said.
The TAIEX fared similarly to its regional peers yesterday, with the Nikkei index dropping 2.11 percent, the Hang Seng declining 2.35 percent and the Shanghai Composite Index dropping 1.41 percent.
The TAIEX is unlikely to drift into a downward spiral, unless local companies begin trimming their financial forecasts, Tsai said.
Despite the US Federal Reserve’s interest rate cut on Wednesday, the New Taiwan dollar fell against the greenback amid heavy selling pressure, shedding NT$0.194 to close at NT$31.376, Taipei Forex Inc data showed.
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