Taiwanese shares yesterday took a beating as investors reacted to Wall Street’s heavy losses on Friday, after St Louis Federal Reserve President James Bullard said that the US central bank could start a rate hike cycle as soon as next year.
The bellwether electronics sector also came under heavy downward pressure, leading the TAIEX lower, while the shipping and paper industries outperformed the broader market on a cyclical recovery, dealers said.
“Bullard’s comments struck the nerves of many investors in global financial markets,” Concord Securities Co (康和證券) analyst Kerry Huang (黃志祺) said.
“Markets in Taiwan and the region could not keep from feeling the effects of the Dow’s dive,” Huang said, referring to the losses reported by markets in Tokyo and Hong Kong.
The TAIEX ended down 255.56 points, or 1.48 percent, at 17,062.98, on turnover of NT$510.693 billion (US$18.27 billion), Taiwan Stock Exchange data showed.
Foreign institutional investors sold a net NT$33.58 billion in shares after a net sell of NT$15.81 billion on Friday.
The electronics sector fell 2.53 percent and the semiconductor sub-index lost 3.29 percent, after Taiwan Semiconductor Manufacturing Co (台積電) fell 3.22 percent to close at the day’s low of NT$583.
“Shipping stocks kept attracting strong buying, as many large ports worldwide remained jammed, which continued to lead to cargo shipping service shortages and higher freight rates,” Huang said.
Wan Hai Lines Ltd (萬海航運) soared 10 percent, Evergreen Marine Transport Corp (長榮海運) rose 8.57 percent and Yang Ming Marine Transport Corp (陽明海運) added 6.02 percent. Buying also spread to bulk cargo shipping companies, with U-Ming Marine Transport Corp (裕民航運) up 10 percent.
Paper suppliers moved higher on rising industrial paper prices, with Longcheng Paper & Packaging Co (榮成紙業) closing 3.82 percent higher and Shihlin Paper Co (士林紙業) gaining 10 percent, Huang said.
After yesterday’s plunge, more losses on the TAIEX are possible, with strong technical resistance likely to be seen around the 60-day moving average of 16,837 points, Huang said.
“Investors should watch what the Fed says closely and the reaction of US markets,” he said, adding that Fed Chairman Jerome Powell is scheduled to attend a US congressional hearing later this week.
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