The TAIEX yesterday fell 177.59 points following overnight losses on US markets and growing inflation concerns. Selling focused on shipping stocks and was seen almost across the board.
“Volatility on the US markets dampened market confidence here, so the local main board came under pressure soon after the market opened and the weakness continued into the end of the session,” Concord Securities Co (康和證券) analyst Kerry Huang (黃志祺) said.
“Growing international crude prices raised worries about inflation and also boosted fears over the impact on a global economic recovery amid COVID-19,” Huang added.
The TAIEX closed down 1.07 percent at 16,462.84. Turnover totaled NT$278.299 billion (US$9.89 billion), with foreign institutional investors selling a net NT$16.76 billion of shares on the main board.
Huang said that non-tech stocks were the target of selling, led by the shipping industry.
The transportation sector, where major shipping stocks are traded, plunged 7.55 percent. Container cargo shipper Yang Ming Marine Transport Corp (陽明海運) fell 9.71 percent to NT$87.4, Evergreen Marine Corp (長榮海運) lost 9.5 percent to NT$90.5 and Wan Hai Lines Ltd (萬海航運) dropped 9.44 percent to NT$153.5.
Bulk cargo shipper U-Ming Marine Transport Corp (裕民航運) plunged 10 percent — the daily limit — to NT$65.7.
“Retail investors favored margin trading to buy shipping stocks and now heavy losses among these stocks triggered margin calls, leading investors to cut their holdings,” Huang said.
Evergreen Marine shares sat on more than NT$30 billion in margin trading, potentially paving the way for more margin calls, he said.
Losses on the broader market tapered off after the bellwether electronics sector rallied from an earlier downturn with the help of late-session buying.
“The bright spot was that TSMC recouped all of its earlier losses,” Huang said, referring to contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).
Shares of TSMC closed unchanged at NT$575, after hitting a low of NT$564. Led by TSMC — the most heavily weighted stock on the local market — the electronics index closed down 0.84 percent.
“Judging from a weaker [New] Taiwan dollar today, I suspect that the buying of TSMC came from government-led funds, instead of foreign institutional investors, in a bid to prevent the TAIEX from falling farther,” Huang said.
The TAIEX could see short-term technical support at about 16,162 points, which was an intraday low on Tuesday last week, Huang said, but investors “had better watch closely how fast crude oil prices and the benchmark 10-year US Treasury yield move higher, as the changes will move the global markets.”
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